false--12-31 Q3 2019 0000915913 0.037 4460000 4391000 0.335 1.005 0.3675 1.1025 0.01 0.01 105616000 106031000 105616000 106031000 0.0545 0.045 0.0415 0.01875 0.0545 0.045 0.0415 4004000 589000 2884000 2841000 3889000 364000 2519000 2040000 P1Y P2Y P1Y 0 139100000 0000915913 2019-01-01 2019-09-30 0000915913 2019-10-31 0000915913 2018-01-01 2018-09-30 0000915913 2019-07-01 2019-09-30 0000915913 2018-07-01 2018-09-30 0000915913 2019-09-30 0000915913 2018-12-31 0000915913 us-gaap:RetainedEarningsMember 2019-01-01 2019-09-30 0000915913 2017-12-31 0000915913 us-gaap:CommonStockMember 2018-01-01 2018-09-30 0000915913 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-09-30 0000915913 us-gaap:ParentMember 2019-01-01 2019-09-30 0000915913 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-09-30 0000915913 us-gaap:ParentMember 2019-06-30 0000915913 us-gaap:NoncontrollingInterestMember 2019-06-30 0000915913 us-gaap:CommonStockMember 2017-12-31 0000915913 us-gaap:NoncontrollingInterestMember 2019-01-01 2019-09-30 0000915913 us-gaap:ParentMember 2019-09-30 0000915913 us-gaap:AdditionalPaidInCapitalMember 2018-07-01 2018-09-30 0000915913 us-gaap:CommonStockMember 2018-06-30 0000915913 us-gaap:RetainedEarningsMember 2018-01-01 2018-09-30 0000915913 us-gaap:ParentMember 2019-07-01 2019-09-30 0000915913 us-gaap:ParentMember 2018-01-01 2018-09-30 0000915913 us-gaap:CommonStockMember 2018-07-01 2018-09-30 0000915913 us-gaap:AdditionalPaidInCapitalMember 2019-07-01 2019-09-30 0000915913 us-gaap:CommonStockMember 2019-07-01 2019-09-30 0000915913 2018-09-30 0000915913 us-gaap:NoncontrollingInterestMember 2019-07-01 2019-09-30 0000915913 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-09-30 0000915913 us-gaap:CommonStockMember 2019-09-30 0000915913 us-gaap:ParentMember 2018-07-01 2018-09-30 0000915913 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0000915913 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-09-30 0000915913 us-gaap:CommonStockMember 2018-09-30 0000915913 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-09-30 0000915913 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-07-01 2019-09-30 0000915913 us-gaap:CommonStockMember 2019-01-01 2019-09-30 0000915913 us-gaap:RetainedEarningsMember 2019-09-30 0000915913 us-gaap:RetainedEarningsMember 2018-07-01 2018-09-30 0000915913 us-gaap:NoncontrollingInterestMember 2019-09-30 0000915913 us-gaap:NoncontrollingInterestMember 2017-12-31 0000915913 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000915913 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0000915913 us-gaap:ParentMember 2017-12-31 0000915913 2018-06-30 0000915913 us-gaap:NoncontrollingInterestMember 2018-09-30 0000915913 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-09-30 0000915913 us-gaap:NoncontrollingInterestMember 2018-07-01 2018-09-30 0000915913 us-gaap:ParentMember 2018-06-30 0000915913 us-gaap:ParentMember 2018-09-30 0000915913 us-gaap:RetainedEarningsMember 2018-09-30 0000915913 us-gaap:CommonStockMember 2018-12-31 0000915913 us-gaap:NoncontrollingInterestMember 2018-12-31 0000915913 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000915913 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0000915913 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0000915913 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-07-01 2018-09-30 0000915913 us-gaap:CommonStockMember 2019-06-30 0000915913 us-gaap:AdditionalPaidInCapitalMember 2019-09-30 0000915913 2019-06-30 0000915913 us-gaap:RetainedEarningsMember 2018-06-30 0000915913 us-gaap:RetainedEarningsMember 2017-12-31 0000915913 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0000915913 us-gaap:ParentMember 2018-12-31 0000915913 us-gaap:RetainedEarningsMember 2019-07-01 2019-09-30 0000915913 us-gaap:AdditionalPaidInCapitalMember 2018-09-30 0000915913 us-gaap:RetainedEarningsMember 2018-12-31 0000915913 us-gaap:NoncontrollingInterestMember 2018-01-01 2018-09-30 0000915913 us-gaap:RetainedEarningsMember 2019-06-30 0000915913 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0000915913 us-gaap:NoncontrollingInterestMember 2018-06-30 0000915913 us-gaap:AccountingStandardsUpdate201602Member 2019-01-01 0000915913 us-gaap:AccountingStandardsUpdate201616Member us-gaap:RetainedEarningsMember 2018-09-30 0000915913 alb:OutofperiodAdjustmentsMember 2019-07-01 2019-09-30 0000915913 srt:MaximumMember us-gaap:BuildingMember 2019-09-30 0000915913 srt:MaximumMember alb:NonrealestateMember 2019-09-30 0000915913 srt:MaximumMember 2019-09-30 0000915913 srt:MinimumMember us-gaap:BuildingMember 2019-09-30 0000915913 srt:MinimumMember alb:NonrealestateMember 2019-09-30 0000915913 srt:MinimumMember 2019-09-30 0000915913 us-gaap:OtherIntangibleAssetsMember 2019-09-30 0000915913 alb:CustomerListsAndRelationshipsMember 2019-09-30 0000915913 us-gaap:TrademarksAndTradeNamesMember 2019-09-30 0000915913 alb:PatentsAndTechnologyMember 2019-09-30 0000915913 us-gaap:OtherIntangibleAssetsMember 2019-01-01 2019-09-30 0000915913 alb:PatentsAndTechnologyMember 2018-12-31 0000915913 us-gaap:TrademarksAndTradeNamesMember 2019-01-01 2019-09-30 0000915913 us-gaap:TrademarksAndTradeNamesMember 2018-12-31 0000915913 us-gaap:OtherIntangibleAssetsMember 2018-12-31 0000915913 alb:PatentsAndTechnologyMember 2019-01-01 2019-09-30 0000915913 alb:CustomerListsAndRelationshipsMember 2018-12-31 0000915913 alb:CustomerListsAndRelationshipsMember 2019-01-01 2019-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:BromineSpecialtiesMember 2019-01-01 2019-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:LithiumMember 2019-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:LithiumMember 2019-01-01 2019-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:CatalystsMember 2018-12-31 0000915913 us-gaap:OperatingSegmentsMember alb:LithiumMember 2018-12-31 0000915913 us-gaap:OperatingSegmentsMember us-gaap:AllOtherSegmentsMember 2019-01-01 2019-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:CatalystsMember 2019-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:BromineSpecialtiesMember 2018-12-31 0000915913 us-gaap:OperatingSegmentsMember us-gaap:AllOtherSegmentsMember 2018-12-31 0000915913 us-gaap:OperatingSegmentsMember alb:BromineSpecialtiesMember 2019-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:CatalystsMember 2019-01-01 2019-09-30 0000915913 us-gaap:OperatingSegmentsMember us-gaap:AllOtherSegmentsMember 2019-09-30 0000915913 alb:TaxaccountingmethodchangeMember 2018-01-01 2018-09-30 0000915913 alb:ForeignAccrualtoReturnAdjustmentMember 2018-01-01 2018-09-30 0000915913 alb:ForeignAccrualtoReturnAdjustmentMember 2018-07-01 2018-09-30 0000915913 alb:GainonsaleofbusinessMember 2018-01-01 2018-09-30 0000915913 2019-02-26 0000915913 us-gaap:SubsequentEventMember 2019-10-29 0000915913 2019-07-24 0000915913 alb:LithiumMember 2018-12-31 0000915913 alb:LithiumMember 2019-09-30 0000915913 alb:OtherVariableInterestEntitiesExcludingWindfieldHoldingsMember 2019-09-30 0000915913 alb:JointVentureWindfieldHoldingsMember 2019-09-30 0000915913 alb:OtherVariableInterestEntitiesExcludingWindfieldHoldingsMember 2018-12-31 0000915913 alb:JointVentureWindfieldHoldingsMember 2018-12-31 0000915913 alb:OnePointEightSevenFivePercentSeniorNotesMember us-gaap:SeniorNotesMember 2019-09-30 0000915913 alb:FivePointFourFivePercentSeniorNotesMember us-gaap:SeniorNotesMember 2018-12-31 0000915913 us-gaap:CapitalLeaseObligationsMember 2019-09-30 0000915913 alb:FourPointFiveZeroPercentSeniorNotesMember us-gaap:SeniorNotesMember 2019-09-30 0000915913 us-gaap:CapitalLeaseObligationsMember 2018-12-31 0000915913 us-gaap:CommercialPaperMember 2019-09-30 0000915913 us-gaap:CommercialPaperMember 2018-12-31 0000915913 alb:FivePointFourFivePercentSeniorNotesMember us-gaap:SeniorNotesMember 2019-09-30 0000915913 alb:FourPointFiveZeroPercentSeniorNotesMember us-gaap:SeniorNotesMember 2018-12-31 0000915913 alb:OnePointEightSevenFivePercentSeniorNotesMember us-gaap:SeniorNotesMember 2018-12-31 0000915913 alb:FourPointOneFivePercentSeniorNotesMember us-gaap:SeniorNotesMember 2018-12-31 0000915913 alb:FourPointOneFivePercentSeniorNotesMember us-gaap:SeniorNotesMember 2019-09-30 0000915913 alb:VariablerateforeignbankloansMember 2019-09-30 0000915913 alb:VariablerateforeignbankloansMember 2018-12-31 0000915913 alb:OnePointEightSevenFivePercentSeniorNotesMember 2019-09-30 0000915913 srt:MaximumMember alb:A2019CreditFacilityMember 2019-08-14 2019-08-14 0000915913 alb:A2019CreditFacilityMember 2019-08-14 0000915913 us-gaap:CommercialPaperMember 2019-01-01 2019-09-30 0000915913 srt:MinimumMember alb:A2019CreditFacilityMember 2019-08-14 2019-08-14 0000915913 us-gaap:CommercialPaperMember 2019-09-30 0000915913 alb:MineralResourcesLimitedWodginaProjectMember us-gaap:SubsequentEventMember 2019-11-01 2019-11-01 0000915913 alb:A2019CreditFacilityMember 2019-01-01 2019-09-30 0000915913 alb:A2019CreditFacilityMember us-gaap:SubsequentEventMember 2019-10-31 0000915913 alb:FourPointOneFivePercentSeniorNotesMember 2018-12-31 0000915913 alb:OnePointEightSevenFivePercentSeniorNotesMember 2018-12-31 0000915913 alb:FivePointFourFivePercentSeniorNotesMember 2018-12-31 0000915913 alb:A2019CreditFacilityMember 2019-09-30 0000915913 alb:FourPointFiveZeroPercentSeniorNotesMember 2019-09-30 0000915913 alb:FourPointOneFivePercentSeniorNotesMember 2019-09-30 0000915913 alb:FivePointFourFivePercentSeniorNotesMember 2019-09-30 0000915913 alb:FourPointFiveZeroPercentSeniorNotesMember 2018-12-31 0000915913 us-gaap:OtherNoncurrentLiabilitiesMember 2019-09-30 0000915913 srt:MinimumMember 2019-01-01 2019-09-30 0000915913 srt:MaximumMember 2019-01-01 2019-09-30 0000915913 us-gaap:AccruedLiabilitiesMember 2019-09-30 0000915913 us-gaap:OtherNoncurrentLiabilitiesMember 2018-12-31 0000915913 us-gaap:OperatingSegmentsMember alb:LithiumMember 2018-07-01 2018-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:CatalystsMember 2018-01-01 2018-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:BromineSpecialtiesMember 2018-01-01 2018-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:BromineSpecialtiesMember 2019-07-01 2019-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:LithiumMember 2018-01-01 2018-09-30 0000915913 us-gaap:CorporateNonSegmentMember 2018-01-01 2018-09-30 0000915913 us-gaap:AllOtherSegmentsMember 2018-07-01 2018-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:ReportableSegmentsSubtotalMember 2019-01-01 2019-09-30 0000915913 us-gaap:AllOtherSegmentsMember 2018-01-01 2018-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:ReportableSegmentsSubtotalMember 2018-01-01 2018-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:ReportableSegmentsSubtotalMember 2018-07-01 2018-09-30 0000915913 us-gaap:CorporateNonSegmentMember 2018-07-01 2018-09-30 0000915913 us-gaap:AllOtherSegmentsMember 2019-01-01 2019-09-30 0000915913 us-gaap:AllOtherSegmentsMember 2019-07-01 2019-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:CatalystsMember 2019-07-01 2019-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:CatalystsMember 2018-07-01 2018-09-30 0000915913 us-gaap:CorporateNonSegmentMember 2019-07-01 2019-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:LithiumMember 2019-07-01 2019-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:ReportableSegmentsSubtotalMember 2019-07-01 2019-09-30 0000915913 us-gaap:CorporateNonSegmentMember 2019-01-01 2019-09-30 0000915913 us-gaap:OperatingSegmentsMember alb:BromineSpecialtiesMember 2018-07-01 2018-09-30 0000915913 us-gaap:CostOfSalesMember 2018-01-01 2018-09-30 0000915913 us-gaap:OtherExpenseMember 2018-07-01 2018-09-30 0000915913 alb:GuaranteeFromPreviouslyDisposedBusinessMember 2018-01-01 2018-09-30 0000915913 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-07-01 2019-09-30 0000915913 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-07-01 2018-09-30 0000915913 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-01-01 2019-09-30 0000915913 alb:A2014SalesContractMember 2018-07-01 2018-09-30 0000915913 us-gaap:CostOfSalesMember 2018-07-01 2018-09-30 0000915913 us-gaap:CostOfSalesMember 2019-07-01 2019-09-30 0000915913 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-01-01 2018-09-30 0000915913 us-gaap:OtherExpenseMember 2018-01-01 2018-09-30 0000915913 us-gaap:OtherExpenseMember 2019-07-01 2019-09-30 0000915913 us-gaap:OtherExpenseMember 2019-01-01 2019-09-30 0000915913 alb:A2014SalesContractMember 2018-01-01 2018-09-30 0000915913 alb:GuaranteeFromPreviouslyDisposedBusinessMember 2018-07-01 2018-09-30 0000915913 us-gaap:CostOfSalesMember 2019-01-01 2019-09-30 0000915913 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-01-01 2018-09-30 0000915913 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-01-01 2019-09-30 0000915913 us-gaap:PensionPlansDefinedBenefitMember 2019-01-01 2019-09-30 0000915913 us-gaap:PensionPlansDefinedBenefitMember 2019-07-01 2019-09-30 0000915913 us-gaap:PensionPlansDefinedBenefitMember 2018-01-01 2018-09-30 0000915913 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-07-01 2018-09-30 0000915913 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-07-01 2019-09-30 0000915913 us-gaap:PensionPlansDefinedBenefitMember 2018-07-01 2018-09-30 0000915913 alb:OtheraccountsreceivableMember us-gaap:ForwardContractsMember 2018-12-31 0000915913 us-gaap:AccruedLiabilitiesMember us-gaap:ForwardContractsMember 2018-12-31 0000915913 us-gaap:AccruedLiabilitiesMember us-gaap:ForwardContractsMember 2019-09-30 0000915913 alb:OtheraccountsreceivableMember us-gaap:ForwardContractsMember 2019-09-30 0000915913 alb:OtherNetMember us-gaap:ForwardContractsMember 2019-01-01 2019-09-30 0000915913 alb:OtherNetMember us-gaap:ForwardContractsMember 2018-01-01 2018-09-30 0000915913 us-gaap:ForwardContractsMember 2018-12-31 0000915913 us-gaap:ForwardContractsMember 2019-09-30 0000915913 alb:OtherIncomeExpenseNetMember us-gaap:ForwardContractsMember 2018-01-01 2018-09-30 0000915913 alb:OtherIncomeExpenseNetMember us-gaap:ForwardContractsMember 2018-07-01 2018-09-30 0000915913 alb:OtherIncomeExpenseNetMember us-gaap:ForwardContractsMember 2019-01-01 2019-09-30 0000915913 alb:OtherIncomeExpenseNetMember us-gaap:ForwardContractsMember 2019-07-01 2019-09-30 0000915913 us-gaap:FairValueInputsLevel2Member 2018-12-31 0000915913 us-gaap:FairValueInputsLevel1Member 2018-12-31 0000915913 us-gaap:FairValueInputsLevel3Member 2018-12-31 0000915913 us-gaap:FairValueMeasuredAtNetAssetValuePerShareMember 2018-12-31 0000915913 us-gaap:FairValueInputsLevel3Member 2019-09-30 0000915913 us-gaap:FairValueInputsLevel1Member 2019-09-30 0000915913 us-gaap:FairValueMeasuredAtNetAssetValuePerShareMember 2019-09-30 0000915913 us-gaap:FairValueInputsLevel2Member 2019-09-30 0000915913 us-gaap:AccumulatedNetGainLossFromCashFlowHedgesIncludingPortionAttributableToNoncontrollingInterestMember 2018-01-01 2018-09-30 0000915913 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2018-01-01 2018-09-30 0000915913 us-gaap:AccumulatedNetInvestmentGainLossIncludingPortionAttributableToNoncontrollingInterestMember 2019-01-01 2019-09-30 0000915913 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2018-07-01 2018-09-30 0000915913 us-gaap:AccumulatedNetInvestmentGainLossIncludingPortionAttributableToNoncontrollingInterestMember 2018-06-30 0000915913 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2019-01-01 2019-09-30 0000915913 us-gaap:AccumulatedNetGainLossFromCashFlowHedgesIncludingPortionAttributableToNoncontrollingInterestMember 2018-12-31 0000915913 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2019-07-01 2019-09-30 0000915913 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2019-06-30 0000915913 us-gaap:AccumulatedNetInvestmentGainLossIncludingPortionAttributableToNoncontrollingInterestMember 2018-01-01 2018-09-30 0000915913 us-gaap:AccumulatedNetGainLossFromCashFlowHedgesIncludingPortionAttributableToNoncontrollingInterestMember 2019-09-30 0000915913 us-gaap:AccumulatedNetInvestmentGainLossIncludingPortionAttributableToNoncontrollingInterestMember 2018-07-01 2018-09-30 0000915913 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2019-06-30 0000915913 us-gaap:AccumulatedNetGainLossFromCashFlowHedgesIncludingPortionAttributableToNoncontrollingInterestMember 2019-01-01 2019-09-30 0000915913 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2018-12-31 0000915913 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2019-01-01 2019-09-30 0000915913 us-gaap:AccumulatedNetGainLossFromCashFlowHedgesIncludingPortionAttributableToNoncontrollingInterestMember 2019-06-30 0000915913 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2018-09-30 0000915913 us-gaap:AccumulatedNetInvestmentGainLossIncludingPortionAttributableToNoncontrollingInterestMember 2019-09-30 0000915913 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2018-01-01 2018-09-30 0000915913 us-gaap:AccumulatedNetGainLossFromCashFlowHedgesIncludingPortionAttributableToNoncontrollingInterestMember 2019-07-01 2019-09-30 0000915913 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2019-07-01 2019-09-30 0000915913 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2017-12-31 0000915913 us-gaap:AccumulatedNetGainLossFromCashFlowHedgesIncludingPortionAttributableToNoncontrollingInterestMember 2018-06-30 0000915913 us-gaap:AccumulatedNetInvestmentGainLossIncludingPortionAttributableToNoncontrollingInterestMember 2019-07-01 2019-09-30 0000915913 us-gaap:AccumulatedNetGainLossFromCashFlowHedgesIncludingPortionAttributableToNoncontrollingInterestMember 2018-07-01 2018-09-30 0000915913 us-gaap:AccumulatedNetInvestmentGainLossIncludingPortionAttributableToNoncontrollingInterestMember 2017-12-31 0000915913 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2018-12-31 0000915913 us-gaap:AccumulatedNetInvestmentGainLossIncludingPortionAttributableToNoncontrollingInterestMember 2018-12-31 0000915913 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2018-09-30 0000915913 us-gaap:AccumulatedNetInvestmentGainLossIncludingPortionAttributableToNoncontrollingInterestMember 2019-06-30 0000915913 us-gaap:AccumulatedNetInvestmentGainLossIncludingPortionAttributableToNoncontrollingInterestMember 2018-09-30 0000915913 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2019-09-30 0000915913 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2018-07-01 2018-09-30 0000915913 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2018-06-30 0000915913 us-gaap:AccumulatedNetGainLossFromCashFlowHedgesIncludingPortionAttributableToNoncontrollingInterestMember 2017-12-31 0000915913 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2019-09-30 0000915913 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2018-06-30 0000915913 us-gaap:AccumulatedNetGainLossFromCashFlowHedgesIncludingPortionAttributableToNoncontrollingInterestMember 2018-09-30 0000915913 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2017-12-31 0000915913 us-gaap:EquityMethodInvesteeMember 2018-12-31 0000915913 us-gaap:EquityMethodInvesteeMember 2019-09-30 0000915913 us-gaap:EquityMethodInvesteeMember 2019-01-01 2019-09-30 0000915913 us-gaap:EquityMethodInvesteeMember 2018-07-01 2018-09-30 0000915913 us-gaap:EquityMethodInvesteeMember 2019-07-01 2019-09-30 0000915913 us-gaap:EquityMethodInvesteeMember 2018-01-01 2018-09-30 0000915913 alb:MineralResourcesLimitedWodginaProjectMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-07-01 2019-09-30 0000915913 alb:MineralResourcesLimitedWodginaProjectMember us-gaap:SubsequentEventMember 2019-10-31 2019-10-31 0000915913 alb:MineralResourcesLimitedWodginaProjectMember us-gaap:SubsequentEventMember 2019-10-31 0000915913 alb:LithiumHydroxideConversionAssetsMember us-gaap:SubsequentEventMember 2019-10-31 2019-10-31 0000915913 alb:MineralResourcesLimitedWodginaProjectMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-01-01 2019-09-30 0000915913 alb:MineralResourcesLimitedWodginaProjectMember alb:LithiumHydroxideConversionAssetsMember us-gaap:SubsequentEventMember 2019-10-31 2019-10-31 0000915913 alb:WodginaLithiumOperationsPty.Ltd.Member us-gaap:SubsequentEventMember 2019-10-31 2019-10-31 xbrli:shares iso4217:USD xbrli:shares xbrli:pure iso4217:USD alb:segment
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)
PART I. | FINANCIAL INFORMATION |
Item 1. | Financial Statements (Unaudited) |
| Consolidated Statements of Income - Three Months and Nine Months Ended September 30, 2019 and 2018 | 3
| Consolidated Statements of Comprehensive Income - Three Months and Nine Months Ended September 30, 2019 and 2018 | 4
| Condensed Consolidated Balance Sheets - September 30, 2019 and December 31, 2018 | 5
| Consolidated Statements of Changes in Equity - Three Months and Nine Months Ended September 30, 2019 and 2018 | 6
| Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2019 and 2018 | 7
| Notes to the Condensed Consolidated Financial Statements | 8-25
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25-42
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 42
Item 4. | Controls and Procedures | 42
PART II. | OTHER INFORMATION |
Item 1. | Legal Proceedings | 43
Item 1A. | Risk Factors | 43
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 43
Item 6. | Exhibits | 43
SIGNATURES |  | 44
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, 2019, there were 226,872 common stock equivalents not included in the computation of diluted earnings per share because their effect would have been anti-dilutive.
On February 26, 2019, the Company increased the regular quarterly dividend by 10% to $0.3675 per share. On July 24, 2019, the Company declared a cash dividend of $0.3675 per share, which was paid on October 1, 2019 to shareholders of record at the close of business as of September 13, 2019. On October 29, 2019, the Company declared a cash dividend of $0.3675 per share, which is payable on January 2, 2020 to shareholders of record at the close of business as of December 13, 2019.
NOTE 6—Inventories:
The following table provides a breakdown of inventories at September 30, 2019 and December 31, 2018 (in thousands):

| September 30, |  | December 31,
| 2019 |  | 2018
Finished goods(a)(b) | $ | 561,981 |  |  | $ | 482,355 |
Raw materials and work in process(c) | 173,973 |  |  | 158,290 |
Stores, supplies and other | 66,480 |  |  | 59,895 |
Total | $ | 802,434 |  |  | $ | 700,540 |

(a) | Increase primarily due to the build-up of inventory in our Lithium and Catalysts segments to meet higher projected sales during the remainder of 2019.

(b) | Included $96.3 million and $104.3 million at September 30, 2019 and December 31, 2018, respectively, of chemical grade spodumene in our Lithium segment, most of which is converted to battery-grade products either internally or through our tolling agreements. We expect this amount to continue to decrease in the fourth quarter of 2019.

(c) | Included $70.3 million and $71.4 million at September 30, 2019 and December 31, 2018, respectively, of work in process in our Lithium segment.

NOTE 7—Investments:
The Company holds a 49% equity interest in Windfield Holdings Pty. Ltd. (“Windfield”), where the ownership parties share risks and benefits disproportionate to their voting interests. As a result, the Company considers Windfield to be a variable interest entity (“VIE”), however this investment is not consolidated as the Company is not the primary beneficiary. The carrying
12

Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
amount of our 49% equity interest in Windfield, which is our most significant VIE, was $376.5 million and $349.6 million at September 30, 2019 and December 31, 2018, respectively. The Company’s aggregate net investment in all other entities which it considers to be VIEs for which the Company is not the primary beneficiary was $7.7 million and $8.1 million at September 30, 2019 and December 31, 2018, respectively. Our unconsolidated VIEs are reported in Investments on the condensed consolidated balance sheets. The Company does not guarantee debt for, or have other financial support obligations to, these entities, and its maximum exposure to loss in connection with its continuing involvement with these entities is limited to the carrying value of the investments.
NOTE 8—Long-Term Debt:
Long-term debt at September 30, 2019 and December 31, 2018 consisted of the following (in thousands):

| September 30, |  | December 31,
| 2019 |  | 2018
1.875% Senior notes, net of unamortized discount and debt issuance costs of $2,040 at September 30, 2019 and $2,841 at December 31, 2018 | $ | 427,941 |  |  | $ | 444,155 |
4.15% Senior notes, net of unamortized discount and debt issuance costs of $2,519 at September 30, 2019 and $2,884 at December 31, 2018 | 422,481 |  |  | 422,116 |
4.50% Senior notes, net of unamortized discount and debt issuance costs of $364 at September 30, 2019 and $589 at December 31, 2018 | 174,852 |  |  | 174,626 |
5.45% Senior notes, net of unamortized discount and debt issuance costs of $3,889 at September 30, 2019 and $4,004 at December 31, 2018 | 346,112 |  |  | 345,996 |
Commercial paper notes | 539,300 |  |  | 306,606 |
Variable-rate foreign bank loans | 7,424 |  |  | 7,216 |
Finance lease obligations | 3,834 |  |  | 4,495 |
Total long-term debt | 1,921,944 |  |  | 1,705,210 |
Less amounts due within one year | 539,960 |  |  | 307,294 |
Long-term debt, less current portion | $ | 1,381,984 |  |  | $ | 1,397,916 |

Current portion of long-term debt at September 30, 2019 consisted primarily of commercial paper notes with a weighted-average interest rate of approximately 2.28% and a weighted-average maturity of 31 days.
The carrying value of our 1.875% Euro-denominated senior notes has been designated as an effective hedge of our net investment in certain foreign subsidiaries where the Euro serves as the functional currency, and gains or losses on the revaluation of these senior notes to our reporting currency are recorded in accumulated other comprehensive loss. During the three-month and nine-month periods ended September 30, 2019, gains of $12.7 million and $13.0 million (net of income taxes), respectively, and during the three-month and nine-month periods ended September 30, 2018, (losses) gains of ($3.6) million and $4.9 million (net of income taxes), respectively, were recorded in accumulated other comprehensive loss in connection with the revaluation of these senior notes to our reporting currency.
On August 14, 2019, the Company entered into a $1.2 billion unsecured credit facility (the “2019 Credit Facility”) with several banks and other financial institutions. The lenders’ commitment to provide loans under the 2019 Credit Facility terminates on August 11, 2020, with each such loan maturing one year after the funding of such loan. The Company can request that the maturity date of loans be extended for an additional period of up to four additional years, but any such extension is subject to the approval of the lenders. Borrowings under the 2019 Credit Facility bear interest at variable rates based on an average London inter-bank offered rate (“LIBOR”) for deposits in the relevant currency plus an applicable margin which ranges from 0.875% to 1.625%, depending on the Company’s credit rating from Standard & Poor’s Financial Services LLC, Moody’s Investor Services, Inc. and Fitch Ratings, Inc. As of the closing of the 2019 Credit Facility, the applicable margin over LIBOR was 1.125%. There were no borrowings outstanding under the 2019 Credit Facility as of September 30, 2019. In October 2019, we borrowed $1.0 billion under this credit facility to fund the cash portion of the October 31, 2019 acquisition of a 60% interest in Mineral Resources Limited’s (“MRL”) Wodgina hard rock lithium mine project (“Wodgina Project”) and for general corporate purposes. See Note 18, “Subsequent Events,” for further details of the acquisition.
In addition, on August 14, 2019, the Company entered into an amendment to its existing credit agreement, dated as of June 21, 2018 to (a) extend the maturity date to August 9, 2024 (subject to the Company’s right to request that such maturity date be further extended for an additional one-year period), and (b) conform certain representations, warranties and covenants to those under the 2019 Credit Facility.
13

Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
NOTE 9—Commitments and Contingencies:
Environmental
We had the following activity in our recorded environmental liabilities for the nine months ended September 30, 2019 (in thousands):

Beginning balance at December 31, 2018 | $ | 49,569 |
Expenditures | (4,626 | )
Accretion of discount | 799 |
Additions and changes in estimates | 1,070 |
Foreign currency translation adjustments and other | (2,007 | )
Ending balance at September 30, 2019 | 44,805 |
Less amounts reported in Accrued expenses | 9,588 |
Amounts reported in Other noncurrent liabilities | $ | 35,217 |

Environmental remediation liabilities included discounted liabilities of $37.0 million and $40.4 million at September 30, 2019 and December 31, 2018, respectively, discounted at rates with a weighted-average of 3.7%, with the undiscounted amount totaling $69.7 million and $74.5 million at September 30, 2019 and December 31, 2018, respectively. For certain locations where the Company is operating groundwater monitoring and/or remediation systems, prior owners or insurers have assumed all or most of the responsibility.
The amounts recorded represent our future remediation and other anticipated environmental liabilities. These liabilities typically arise during the normal course of our operational and environmental management activities or at the time of acquisition of the site, and are based on internal analysis as well as input from outside consultants. As evaluations proceed at each relevant site, changes in risk assessment practices, remediation techniques and regulatory requirements can occur, therefore such liability estimates may be adjusted accordingly. The timing and duration of remediation activities at these sites will be determined when evaluations are completed. Although it is difficult to quantify the potential financial impact of these remediation liabilities, management estimates (based on the latest available information) that there is a reasonable possibility that future environmental remediation costs associated with our past operations, could be an additional $10 million to $30 million before income taxes, in excess of amounts already recorded. The variability of this range is primarily driven by possible environmental remediation activity at a formerly owned site where we indemnify the buyer through a set cutoff date in 2024.
We believe that any sum we may be required to pay in connection with environmental remediation matters in excess of the amounts recorded would likely occur over a period of time and would likely not have a material adverse effect upon our results of operations, financial condition or cash flows on a consolidated annual basis although any such sum could have a material adverse impact on our results of operations, financial condition or cash flows in a particular quarterly reporting period.
Litigation
We are involved from time to time in legal proceedings of types regarded as common in our business, including administrative or judicial proceedings seeking remediation under environmental laws, such as the federal Comprehensive Environmental Response, Compensation and Liability Act, commonly known as CERCLA or Superfund, products liability, breach of contract liability and premises liability litigation. Where appropriate, we may establish financial reserves for such proceedings. We also maintain insurance to mitigate certain of such risks. Costs for legal services are generally expensed as incurred.
As previously reported in 2018, following receipt of information regarding potential improper payments being made by third party sales representatives of our Refining Solutions business, within our Catalysts segment, we promptly retained outside counsel and forensic accountants to investigate potential violations of the Company’s Code of Conduct, the Foreign Corrupt Practices Act and other potentially applicable laws. Based on this internal investigation, we have voluntarily self-reported potential issues relating to the use of third party sales representatives in our Refining Solutions business, within our Catalysts segment, to the U.S. Department of Justice (“DOJ”), the SEC, and the Dutch Public Prosecutor (“DPP”), and are cooperating with the DOJ, the SEC, and DPP in their review of these matters. In connection with our internal investigation, we have implemented, and are continuing to implement, appropriate remedial measures.
At this time, we are unable to predict the duration, scope, result or related costs associated with any investigations by the DOJ, the SEC, or DPP. We are unable to predict what, if any, action may be taken by the DOJ, the SEC, or DPP, or what
14

Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
penalties or remedial actions they may seek to impose. Any determination that our operations or activities are not in compliance with existing laws or regulations could result in the imposition of fines, penalties, disgorgement, equitable relief, or other losses. We do not believe, however, that any fines, penalties, disgorgement, equitable relief or other losses would have a material adverse effect on our financial condition or liquidity.
Indemnities
We are indemnified by third parties in connection with certain matters related to acquired and divested businesses. Although we believe that the financial condition of those parties who may have indemnification obligations to the Company is generally sound, in the event the Company seeks indemnity under any of these agreements or through other means, there can be no assurance that any party who may have obligations to indemnify us will adhere to their obligations and we may have to resort to legal action to enforce our rights under the indemnities.
The Company may be subject to indemnity claims relating to properties or businesses it divested, including properties or businesses of acquired businesses that were divested prior to the completion of the acquisition. In the opinion of management, and based upon information currently available, the ultimate resolution of any indemnification obligations owed to the Company or by the Company is not expected to have a material effect on the Company’s financial condition, results of operations or cash flows. The Company had approximately $26.2 million and $45.3 million at September 30, 2019 and December 31, 2018, respectively, recorded in Other noncurrent liabilities, and $20.6 million recorded in Accrued expenses at September 30, 2019, related to the indemnification of certain income and non-income tax liabilities associated with the Chemetall Surface Treatment entities sold, as well as the proposed settlement of an ongoing audit of a previously disposed business in Germany.
Other
We have contracts with certain of our customers, which serve as guarantees on product delivery and performance according to customer specifications that can cover both shipments on an individual basis as well as blanket coverage of multiple shipments under certain customer supply contracts. The financial coverage provided by these guarantees is typically based on a percentage of net sales value.
NOTE 10—Segment Information:
Our three reportable segments include: (1) Lithium; (2) Bromine Specialties; and (3) Catalysts. Each segment has a dedicated team of sales, research and development, process engineering, manufacturing and sourcing, and business strategy personnel and has full accountability for improving execution through greater asset and market focus, agility and responsiveness. This business structure aligns with the markets and customers we serve through each of the segments. This structure also facilitates the continued standardization of business processes across the organization, and is consistent with the manner in which information is presently used internally by the Company’s chief operating decision maker to evaluate performance and make resource allocation decisions.
Summarized financial information concerning our reportable segments is shown in the following tables. The “All Other” category includes only the fine chemistry services business that does not fit into any of our core businesses.
The Corporate category is not considered to be a segment and includes corporate-related items not allocated to the operating segments. Pension and OPEB service cost (which represents the benefits earned by active employees during the period) and amortization of prior service cost or benefit are allocated to the reportable segments, All Other, and Corporate, whereas the remaining components of pension and OPEB benefits cost or credit (“Non-operating pension and OPEB items”) are included in Corporate. Segment data includes intersegment transfers of raw materials at cost and allocations for certain corporate costs.
The Company’s chief operating decision maker uses adjusted EBITDA (as defined below) to assess the ongoing performance of the Company’s business segments and to allocate resources. The Company defines adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, as adjusted on a consistent basis for certain non-recurring or unusual items in a balanced manner and on a segment basis. These non-recurring or unusual items may include acquisition and integration related costs, gains or losses on sales of businesses, restructuring charges, facility divestiture charges, non-operating pension and OPEB items and other significant non-recurring items. In addition, management uses adjusted EBITDA for business planning purposes and as a significant component in the calculation of performance-based compensation for management and other employees. The Company has reported adjusted EBITDA because management believes it provides transparency to investors and enables period-to-period comparability of financial performance. Adjusted EBITDA is a financial
15

Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
measure that is not required by, or presented in accordance with, U.S. GAAP. Adjusted EBITDA should not be considered as an alternative to Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP, or any other financial measure reported in accordance with U.S. GAAP.

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
| (In thousands)
Net sales: |  |  |  |  |  |  |
Lithium | $ | 330,386 |  |  | $ | 270,928 |  |  | $ | 947,030 |  |  | $ | 886,523 |
Bromine Specialties | 256,267 |  |  | 232,616 |  |  | 760,752 |  |  | 678,769 |
Catalysts | 261,346 |  |  | 251,139 |  |  | 779,295 |  |  | 796,822 |
All Other | 31,748 |  |  | 23,065 |  |  | 109,786 |  |  | 90,978 |
Corporate | — |  |  | — |  |  | — |  |  | 159 |
Total net sales | $ | 879,747 |  |  | $ | 777,748 |  |  | $ | 2,596,863 |  |  | $ | 2,453,251 |
Adjusted EBITDA: |  |  |  |  |  |  |
Lithium | $ | 127,459 |  |  | $ | 113,629 |  |  | $ | 384,854 |  |  | $ | 386,260 |
Bromine Specialties | 88,814 |  |  | 78,585 |  |  | 248,743 |  |  | 217,921 |
Catalysts | 66,944 |  |  | 62,602 |  |  | 193,890 |  |  | 205,534 |
All Other | 10,448 |  |  | 3,968 |  |  | 28,931 |  |  | 7,729 |
Corporate | (39,314 | ) |  | (23,702 | ) |  | (114,300 | ) |  | (75,082 | )
Total adjusted EBITDA | $ | 254,351 |  |  | $ | 235,082 |  |  | $ | 742,118 |  |  | $ | 742,362 |

16

Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
See below for a reconciliation of adjusted EBITDA, the non-GAAP financial measure, from Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP (in thousands):

| Lithium |  | Bromine Specialties |  | Catalysts |  | Reportable Segments Total |  | All Other |  | Corporate |  | Consolidated Total
Three months ended September 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) attributable to Albemarle Corporation | $ | 102,136 |  |  | $ | 75,224 |  |  | $ | 54,345 |  |  | $ | 231,705 |  |  | $ | 8,305 |  |  | $ | (84,940 | ) |  | $ | 155,070 |
Depreciation and amortization | 25,212 |  |  | 12,448 |  |  | 12,599 |  |  | 50,259 |  |  | 2,143 |  |  | 2,085 |  |  | 54,487 |
Acquisition and integration related costs(a) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,114 |  |  | 4,114 |
Interest and financing expenses | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 11,108 |  |  | 11,108 |
Income tax expense | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 25,341 |  |  | 25,341 |
Non-operating pension and OPEB items | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (551 | ) |  | (551 | )
Other(b) | 111 |  |  | 1,142 |  |  | — |  |  | 1,253 |  |  | — |  |  | 3,529 |  |  | 4,782 |
Adjusted EBITDA | $ | 127,459 |  |  | $ | 88,814 |  |  | $ | 66,944 |  |  | $ | 283,217 |  |  | $ | 10,448 |  |  | $ | (39,314 | ) |  | $ | 254,351 |
Three months ended September 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) attributable to Albemarle Corporation | $ | 90,313 |  |  | $ | 67,967 |  |  | $ | 50,491 |  |  | $ | 208,771 |  |  | $ | 1,978 |  |  | $ | (81,004 | ) |  | $ | 129,745 |
Depreciation and amortization | 23,370 |  |  | 10,618 |  |  | 12,111 |  |  | 46,099 |  |  | 1,990 |  |  | 1,618 |  |  | 49,707 |
Restructuring and other(c) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,724 |  |  | 3,724 |
Acquisition and integration related costs(a) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,305 |  |  | 4,305 |
Interest and financing expenses | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 12,988 |  |  | 12,988 |
Income tax expense | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 33,167 |  |  | 33,167 |
Non-operating pension and OPEB items | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,195 | ) |  | (2,195 | )
Legal accrual(d) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,017 | ) |  | (1,017 | )
Other(e) | (54 | ) |  | — |  |  | — |  |  | (54 | ) |  | — |  |  | 4,712 |  |  | 4,658 |
Adjusted EBITDA | $ | 113,629 |  |  | $ | 78,585 |  |  | $ | 62,602 |  |  | $ | 254,816 |  |  | $ | 3,968 |  |  | $ | (23,702 | ) |  | $ | 235,082 |
Nine months ended September 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) attributable to Albemarle Corporation | $ | 312,609 |  |  | $ | 212,320 |  |  | $ | 156,328 |  |  | $ | 681,257 |  |  | $ | 22,629 |  |  | $ | (261,049 | ) |  | $ | 442,837 |
Depreciation and amortization | 71,669 |  |  | 35,281 |  |  | 37,562 |  |  | 144,512 |  |  | 6,302 |  |  | 5,904 |  |  | 156,718 |
Acquisition and integration related costs(a) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 14,388 |  |  | 14,388 |
Gain on sale of property(f) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (11,079 | ) |  | (11,079 | )
Interest and financing expenses | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 35,295 |  |  | 35,295 |
Income tax expense | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 93,266 |  |  | 93,266 |
Non-operating pension and OPEB items | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,810 | ) |  | (1,810 | )
Other(b) | 576 |  |  | 1,142 |  |  | — |  |  | 1,718 |  |  | — |  |  | 10,785 |  |  | 12,503 |
Adjusted EBITDA | $ | 384,854 |  |  | $ | 248,743 |  |  | $ | 193,890 |  |  | $ | 827,487 |  |  | $ | 28,931 |  |  | $ | (114,300 | ) |  | $ | 742,118 |
Nine months ended September 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) attributable to Albemarle Corporation | $ | 315,939 |  |  | $ | 187,176 |  |  | $ | 387,038 |  |  | $ | 890,153 |  |  | $ | 1,659 |  |  | $ | (327,846 | ) |  | $ | 563,966 |
Depreciation and amortization | 71,760 |  |  | 30,745 |  |  | 37,201 |  |  | 139,706 |  |  | 6,070 |  |  | 4,735 |  |  | 150,511 |
Restructuring and other(c) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,724 |  |  | 3,724 |
Gain on sale of business(g) | — |  |  | — |  |  | (218,705 | ) |  | (218,705 | ) |  | — |  |  | — |  |  | (218,705 | )
Acquisition and integration related costs(a) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 13,016 |  |  | 13,016 |
Interest and financing expenses | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 39,834 |  |  | 39,834 |
Income tax expense | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 133,630 |  |  | 133,630 |
Non-operating pension and OPEB items | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (6,596 | ) |  | (6,596 | )
Legal accrual(d) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 27,027 |  |  | 27,027 |
Environmental accrual(h) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 15,597 |  |  | 15,597 |
Albemarle Foundation contribution(i) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 15,000 |  |  | 15,000 |
Other(e) | (1,439 | ) |  | — |  |  | — |  |  | (1,439 | ) |  | — |  |  | 6,797 |  |  | 5,358 |
Adjusted EBITDA | $ | 386,260 |  |  | $ | 217,921 |  |  | $ | 205,534 |  |  | $ | 809,715 |  |  | $ | 7,729 |  |  | $ | (75,082 | ) |  | $ | 742,362 |

17

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

(a) | Included acquisition and integration related costs relating to various significant projects. For the three-month and nine-month periods ended September 30, 2019, $4.1 million and $14.4 million was recorded in Selling, general and administrative expenses. For the three-month and nine-month periods ended September 30, 2018, $0.9 million and $2.9 million was recorded in Cost of goods sold, respectively, and $3.4 million and $10.2 million was recorded in Selling, general and administrative expenses, respectively.

(b) | Included amounts for the three months ended September 30, 2019 recorded in:

▪ | Cost of goods sold - $0.1 million related to non-routine labor and compensation related costs in Chile that are outside normal compensation arrangements.

▪ | Selling, general and administrative expenses - $1.1 million of a write-off of uncollectable accounts receivable from a terminated distributor in the Bromine Specialties segment.

▪ | Other (expenses) income, net - $3.1 million of unrecoverable vendor costs outside the operations of the business related to the construction of the future Kemerton production facility, as well as a net loss of $0.4 million primarily resulting from the settlement of legal matters related to previously disposed businesses or recorded in purchase accounting.

Included amounts for the nine months ended September 30, 2019 recorded in:

▪ | Cost of goods sold - $0.6 million related to non-routine labor and compensation related costs in Chile that are outside normal compensation arrangements.

▪ | Selling, general and administrative expenses - Expected severance payments to be made in 2019 as part of a business reorganization plan of $5.3 million, with the unpaid balance recorded in Accrued expenses as of September 30, 2019, $1.0 million of shortfall contributions for our multiemployer plan financial improvement plan, and $1.1 million of a write-off of uncollectable accounts receivable from a terminated distributor in the Bromine Specialties segment.

▪ | Other (expenses) income, net - $3.1 million of unrecoverable vendor costs outside the operations of the business related to the construction of the future Kemerton production facility, a net loss of $0.4 million primarily resulting from the settlement of legal matters related to previously disposed businesses or recorded in purchase accounting, and $0.9 million of a net loss primarily resulting from the revision of indemnifications and other liabilities related to previously disposed businesses.

(c) | Severance payments as part of a business reorganization plan, recorded in Selling, general and administrative expenses.

(d) | Included in Other (expenses) income, net for the three-month and nine-month periods ended September 30, 2018 is a gain of $1.4 million and an expense of $16.2 million, respectively, resulting from a jury rendered verdict against Albemarle related to certain business concluded under a 2014 sales agreement for products that Albemarle no longer manufactures and expenses of $0.4 million and $10.8 million, respectively, resulting from a settlement of a legal matter related to guarantees from a previously disposed business.

(e) | Included amounts for the three months ended September 30, 2018 recorded in:

▪ | Cost of goods sold - $3.8 million for the write-off of fixed assets related to a major capacity expansion in our Jordanian joint venture.

▪ | Selling, general and administrative expenses - $0.1 million gain related to a refund from Chilean authorities due to an overpayment made in a prior year, partially offset by a $1.2 million contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to schools in the state of Louisiana for qualified tuition purposes. This contribution is significant in size and is intended to provide long-term benefits for families in the Louisiana community.

▪ | Other (expenses) income, net - $0.2 million gain related to the revision of previously recorded expenses of disposed businesses.

Included amounts for the nine months ended September 30, 2018 recorded in:

▪ | Cost of goods sold - $4.9 million for the write-off of fixed assets related to a major capacity expansion in our Jordanian joint venture.

▪ | Selling, general and administrative expenses - $1.5 million gain related to a refund from Chilean authorities due to an overpayment made in a prior year, partially offset by a $1.2 million contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to schools in the state of Louisiana for qualified tuition purposes. This contribution is significant in size and is intended to provide long-term benefits for families in the Louisiana community.

▪ | Other (expenses) income, net - $0.8 million related to the revision of previously recorded expenses of disposed businesses.

(f) | Gain recorded in Other (expenses) income, net related to the sale of land in Pasadena, Texas not used as part of our operations.

(g) | Gain related to the sale of the Polyolefin Catalysts Divestiture, which closed in the second quarter of 2018.

(h) | Increase in environmental reserve to indemnify the buyer of a formerly owned site recorded in Other (expenses) income, net. As defined in the agreement of sale, this indemnification has a set cutoff date in 2024, at which point we will no longer be required to provide financial coverage.

(i) | Included in Selling, general and administrative expenses is a charitable contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to the Albemarle Foundation, a non-profit organization that sponsors grants, health and social projects, educational initiatives, disaster relief, matching gift programs, scholarships and other charitable initiatives in locations where our employees live and operate. This contribution is in addition to the ordinary annual contribution made to the Albemarle Foundation by the Company, and is significant in size and nature in that it is intended to provide more long-term benefits in the communities where we live and operate.

18

Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
NOTE 11—Pension Plans and Other Postretirement Benefits:
The components of pension and postretirement benefits cost (credit) for the three-month and nine-month periods ended September 30, 2019 and 2018 were as follows (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Pension Benefits Cost (Credit): |  |  |  |  |  |  |
Service cost | $ | 1,118 |  |  | $ | 1,238 |  |  | $ | 3,371 |  |  | $ | 3,765 |
Interest cost | 8,314 |  |  | 7,967 |  |  | 24,854 |  |  | 24,010 |
Expected return on assets | (9,414 | ) |  | (10,703 | ) |  | (28,311 | ) |  | (32,227 | )
Amortization of prior service benefit | (5 | ) |  | 25 |  |  | 7 |  |  | 71 |
Total net pension benefits cost (credit) | $ | 13 |  |  | $ | (1,473 | ) |  | $ | (79 | ) |  | $ | (4,381 | )
Postretirement Benefits Cost (Credit): |  |  |  |  |  |  |
Service cost | $ | 24 |  |  | $ | 29 |  |  | $ | 73 |  |  | $ | 88 |
Interest cost | 549 |  |  | 542 |  |  | 1,647 |  |  | 1,626 |
Expected return on assets | — |  |  | (1 | ) |  | — |  |  | (5 | )
Amortization of prior service benefit | — |  |  | (12 | ) |  | — |  |  | (36 | )
Total net postretirement benefits cost | $ | 573 |  |  | $ | 558 |  |  | $ | 1,720 |  |  | $ | 1,673 |
Total net pension and postretirement benefits cost (credit) | $ | 586 |  |  | $ | (915 | ) |  | $ | 1,641 |  |  | $ | (2,708 | )

All components of net benefit cost (credit), other than service cost, are included in Other (expenses) income, net on the consolidated statements of income.
During the three-month and nine-month periods ended September 30, 2019, we made contributions of $2.1 million and $8.6 million, respectively, to our qualified and nonqualified pension plans. During the three-month and nine-month periods ended September 30, 2018, we made contributions of $3.1 million and $9.0 million, respectively, to our qualified and nonqualified pension plans.
We paid $0.8 million and $2.1 million in premiums to the U.S. postretirement benefit plan during the three-month and nine-month periods ended September 30, 2019, respectively. During the three-month and nine-month periods ended September 30, 2018, we paid $0.8 million and $2.0 million, respectively, in premiums to the U.S. postretirement benefit plan.
NOTE 12—Fair Value of Financial Instruments:
In assessing the fair value of financial instruments, we use methods and assumptions that are based on market conditions and other risk factors existing at the time of assessment. Fair value information for our financial instruments is as follows:
Long-Term Debt—the fair values of our senior notes are estimated using Level 1 inputs and account for the difference between the recorded amount and fair value of our long-term debt. The carrying value of our remaining long-term debt reported in the accompanying condensed consolidated balance sheets approximates fair value as substantially all of such debt bears interest based on prevailing variable market rates currently available in the countries in which we have borrowings.

| September 30, 2019 |  | December 31, 2018
| Recorded Amount |  | Fair Value |  | Recorded Amount |  | Fair Value
| (In thousands)
Long-term debt | $ | 1,927,898 |  |  | $ | 2,019,115 |  |  | $ | 1,712,003 |  |  | $ | 1,731,271 |

Foreign Currency Forward Contracts—we enter into foreign currency forward contracts in connection with our risk management strategies in an attempt to minimize the financial impact of changes in foreign currency exchange rates. These derivative financial instruments are used to manage risk and are not used for trading or other speculative purposes. The fair values of our foreign currency forward contracts are estimated based on current settlement values. At September 30, 2019 and December 31, 2018, we had outstanding foreign currency forward contracts with notional values totaling $1.11 billion and $626.5 million, respectively, hedging our exposure to various currencies including the Euro, Chinese Renminbi, Chilean Peso
19

Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
and Australian Dollar. Our foreign currency forward contracts outstanding at September 30, 2019 and December 31, 2018 have not been designated as hedging instruments under ASC 815, Derivatives and Hedging. The following table summarizes the fair value of our foreign currency forward contracts included in the condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018 (in thousands):

| September 30, |  | December 31,
| 2019 |  | 2018
Foreign currency forward contracts - Other accounts receivable | $ | — |  |  | $ | 431 |
Foreign currency forward contracts - Accrued expenses | $ | 1,697 |  |  | $ | — |

Gains and losses on foreign currency forward contracts are recognized currently in Other (expenses) income, net; further, fluctuations in the value of these contracts are generally expected to be offset by changes in the value of the underlying exposures being hedged, which are also reported in Other (expenses) income, net. The following table summarizes these net losses recognized in our consolidated statements of income during the three-month and nine-month periods ended September 30, 2019 and 2018 (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Foreign currency forward contracts losses | $ | (19,331 | ) |  | $ | (203 | ) |  | $ | (27,647 | ) |  | $ | (13,034 | )

In addition, for the nine-month periods ended September 30, 2019 and 2018, we recorded losses of $27.6 million and $13.0 million, respectively, related to the change in the fair value of our foreign currency forward contracts, and net cash settlements of $25.5 million and $18.1 million, respectively, in Other, net, in our condensed consolidated statements of cash flows.
The counterparties to our foreign currency forward contracts are major financial institutions with which we generally have other financial relationships. We are exposed to credit loss in the event of nonperformance by these counterparties. However, we do not anticipate nonperformance by the counterparties.
NOTE 13—Fair Value Measurement:
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The inputs used to measure fair value are classified into the following hierarchy:

Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2 | Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability
Level 3 | Unobservable inputs for the asset or liability

20

Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following tables set forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2019 and December 31, 2018 (in thousands):

| September 30, 2019 |  | Quoted Prices in Active Markets for Identical Items (Level 1) |  | Quoted Prices in Active Markets for Similar Items (Level 2) |  | Unobservable Inputs (Level 3)
Assets: |  |  |  |  |  |  |
Investments under executive deferred compensation plan(a) | $ | 26,816 |  |  | $ | 26,816 |  |  | $ | — |  |  | $ | — |
Private equity securities(b) | $ | 29 |  |  | $ | 29 |  |  | $ | — |  |  | $ | — |
Private equity securities measured at net asset value(b)(c) | $ | 4,884 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |
Obligations under executive deferred compensation plan(a) | $ | 26,816 |  |  | $ | 26,816 |  |  | $ | — |  |  | $ | — |
Foreign currency forward contracts(d) | $ | 1,697 |  |  | $ | — |  |  | $ | 1,697 |  |  | $ | — |

| December 31, 2018 |  | Quoted Prices in Active Markets for Identical Items (Level 1) |  | Quoted Prices in Active Markets for Similar Items (Level 2) |  | Unobservable Inputs (Level 3)
Assets: |  |  |  |  |  |  |
Investments under executive deferred compensation plan(a) | $ | 26,292 |  |  | $ | 26,292 |  |  | $ | — |  |  | $ | — |
Private equity securities(b) | $ | 26 |  |  | $ | 26 |  |  | $ | — |  |  | $ | — |
Private equity securities measured at net asset value(b)(c) | $ | 7,195 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Foreign currency forward contracts(d) | $ | 431 |  |  | $ | — |  |  | $ | 431 |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |
Obligations under executive deferred compensation plan(a) | $ | 26,292 |  |  | $ | 26,292 |  |  | $ | — |  |  | $ | — |

(a) | We maintain an Executive Deferred Compensation Plan (“EDCP”) that was adopted in 2001 and subsequently amended. The purpose of the EDCP is to provide current tax planning opportunities as well as supplemental funds upon the retirement or death of certain of our employees. The EDCP is intended to aid in attracting and retaining employees of exceptional ability by providing them with these benefits. We also maintain a Benefit Protection Trust (the “Trust”) that was created to provide a source of funds to assist in meeting the obligations of the EDCP, subject to the claims of our creditors in the event of our insolvency. Assets of the Trust are consolidated in accordance with authoritative guidance. The assets of the Trust consist primarily of mutual fund investments (which are accounted for as trading securities and are marked-to-market on a monthly basis through the consolidated statements of income) and cash and cash equivalents. As such, these assets and obligations are classified within Level 1.

(b) | Primarily consists of private equity securities classified as available-for-sale and are reported in Investments in the condensed consolidated balance sheets. The changes in fair value are reported in Other (expenses) income, net, in our consolidated statements of income.

(c) | Holdings in certain private equity securities are measured at fair value using the net asset value per share (or its equivalent) practical expedient and have not been categorized in the fair value hierarchy.

(d) | As a result of our global operating and financing activities, we are exposed to market risks from changes in foreign currency exchange rates, which may adversely affect our operating results and financial position. When deemed appropriate, we minimize our risks from foreign currency exchange rate fluctuations through the use of foreign currency forward contracts. Unless otherwise noted, these derivative financial instruments are not designated as hedging instruments under ASC 815, Derivatives and Hedging. The foreign currency forward contracts are valued using broker quotations or market transactions in either the listed or over-the-counter markets. As such, these derivative instruments are classified within Level 2.

21

Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
NOTE 14—Accumulated Other Comprehensive (Loss) Income:
The components and activity in Accumulated other comprehensive (loss) income (net of deferred income taxes) consisted of the following during the periods indicated below (in thousands):

| Foreign Currency Translation |  | Pension and Postretirement Benefits(a) |  | Net Investment Hedge |  | Interest Rate Swap(b) |  | Total
Three months ended September 30, 2019 |  |  |  |  |  |  |  |  |
Balance at June 30, 2019 | $ | (407,937 | ) |  | $ | (146 | ) |  | $ | 72,604 |  |  | $ | (13,932 | ) |  | $ | (349,411 | )
Other comprehensive (loss) income before reclassifications | (100,069 | ) |  | — |  |  | 12,745 |  |  | — |  |  | (87,324 | )
Amounts reclassified from accumulated other comprehensive loss | — |  |  | (5 | ) |  | — |  |  | 641 |  |  | 636 |
Other comprehensive (loss) income, net of tax | (100,069 | ) |  | (5 | ) |  | 12,745 |  |  | 641 |  |  | (86,688 | )
Other comprehensive loss attributable to noncontrolling interests | 122 |  |  | — |  |  | — |  |  | — |  |  | 122 |
Balance at September 30, 2019 | $ | (507,884 | ) |  | $ | (151 | ) |  | $ | 85,349 |  |  | $ | (13,291 | ) |  | $ | (435,977 | )
Three months ended September 30, 2018 |  |  |  |  |  |  |  |  |
Balance at June 30, 2018 | $ | (343,458 | ) |  | $ | 5 |  |  | $ | 55,119 |  |  | $ | (13,345 | ) |  | $ | (301,679 | )
Other comprehensive loss before reclassifications | (9,549 | ) |  | — |  |  | (3,621 | ) |  | — |  |  | (13,170 | )
Amounts reclassified from accumulated other comprehensive loss | — |  |  | 11 |  |  | — |  |  | 642 |  |  | 653 |
Other comprehensive (loss) income, net of tax | (9,549 | ) |  | 11 |  |  | (3,621 | ) |  | 642 |  |  | (12,517 | )
Other comprehensive loss attributable to noncontrolling interests | 5 |  |  | — |  |  | — |  |  | — |  |  | 5 |
Balance at September 30, 2018 | $ | (353,002 | ) |  | $ | 16 |  |  | $ | 51,498 |  |  | $ | (12,703 | ) |  | $ | (314,191 | )
Nine months ended September 30, 2019 |  |  |  |  |  |  |  |  |
Balance at December 31, 2018 | $ | (407,646 | ) |  | $ | (159 | ) |  | $ | 72,337 |  |  | $ | (15,214 | ) |  | $ | (350,682 | )
Other comprehensive (loss) income before reclassifications | (100,380 | ) |  | — |  |  | 13,012 |  |  | — |  |  | (87,368 | )
Amounts reclassified from accumulated other comprehensive loss | — |  |  | 8 |  |  | — |  |  | 1,923 |  |  | 1,931 |
Other comprehensive (loss) income, net of tax | (100,380 | ) |  | 8 |  |  | 13,012 |  |  | 1,923 |  |  | (85,437 | )
Other comprehensive loss attributable to noncontrolling interests | 142 |  |  | — |  |  | — |  |  | — |  |  | 142 |
Balance at September 30, 2019 | $ | (507,884 | ) |  | $ | (151 | ) |  | $ | 85,349 |  |  | $ | (13,291 | ) |  | $ | (435,977 | )
Nine months ended September 30, 2018 |  |  |  |  |  |  |  |  |
Balance at December 31, 2017 | $ | (257,569 | ) |  | $ | (21 | ) |  | $ | 46,551 |  |  | $ | (14,629 | ) |  | $ | (225,668 | )
Other comprehensive (loss) income before reclassifications | (95,515 | ) |  | — |  |  | 4,947 |  |  | — |  |  | (90,568 | )
Amounts reclassified from accumulated other comprehensive loss | — |  |  | 37 |  |  | — |  |  | 1,926 |  |  | 1,963 |
Other comprehensive (loss) income, net of tax | (95,515 | ) |  | 37 |  |  | 4,947 |  |  | 1,926 |  |  | (88,605 | )
Other comprehensive loss attributable to noncontrolling interests | 82 |  |  | — |  |  | — |  |  | — |  |  | 82 |
Balance at September 30, 2018 | $ | (353,002 | ) |  | $ | 16 |  |  | $ | 51,498 |  |  | $ | (12,703 | ) |  | $ | (314,191 | )

(a) | The pre-tax portion of amounts reclassified from accumulated other comprehensive loss consists of amortization of prior service benefit, which is a component of pension and postretirement benefits cost (credit). See Note 11, “Pension Plans and Other Postretirement Benefits,” for additional information.

(b) | The pre-tax portion of amounts reclassified from accumulated other comprehensive loss is included in interest expense.

22

Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
The amount of income tax (expense) benefit allocated to each component of Other comprehensive (loss) income for the three-month and nine-month periods ended September 30, 2019 and 2018 is provided in the following tables (in thousands):

| Three Months Ended September 30,
| 2019 |  | 2018
| Foreign Currency Translation |  | Pension and Postretirement Benefits |  | Net Investment Hedge |  | Interest Rate Swap |  | Foreign Currency Translation |  | Pension and Postretirement Benefits |  | Net Investment Hedge |  | Interest Rate Swap
Other comprehensive (loss) income, before tax | $ | (100,069 | ) |  | $ | (3 | ) |  | $ | 16,584 |  |  | $ | 834 |  |  | $ | (9,550 | ) |  | $ | 13 |  |  | $ | (4,704 | ) |  | $ | 834 |
Income tax (expense) benefit | — |  |  | (2 | ) |  | (3,839 | ) |  | (193 | ) |  | 1 |  |  | (2 | ) |  | 1,083 |  |  | (192 | )
Other comprehensive (loss) income, net of tax | $ | (100,069 | ) |  | $ | (5 | ) |  | $ | 12,745 |  |  | $ | 641 |  |  | $ | (9,549 | ) |  | $ | 11 |  |  | $ | (3,621 | ) |  | $ | 642 |
| Nine Months Ended September 30,
| 2019 |  | 2018
| Foreign Currency Translation |  | Pension and Postretirement Benefits |  | Net Investment Hedge |  | Interest Rate Swap |  | Foreign Currency Translation |  | Pension and Postretirement Benefits |  | Net Investment Hedge |  | Interest Rate Swap
Other comprehensive (loss) income, before tax | $ | (100,379 | ) |  | $ | 10 |  |  | $ | 16,932 |  |  | $ | 2,502 |  |  | $ | (95,517 | ) |  | $ | 43 |  |  | $ | 6,426 |  |  | $ | 2,502 |
Income tax (expense) benefit | (1 | ) |  | (2 | ) |  | (3,920 | ) |  | (579 | ) |  | 2 |  |  | (6 | ) |  | (1,479 | ) |  | (576 | )
Other comprehensive (loss) income, net of tax | $ | (100,380 | ) |  | $ | 8 |  |  | $ | 13,012 |  |  | $ | 1,923 |  |  | $ | (95,515 | ) |  | $ | 37 |  |  | $ | 4,947 |  |  | $ | 1,926 |

NOTE 15—Related Party Transactions:
Our consolidated statements of income include sales to and purchases from unconsolidated affiliates in the ordinary course of business as follows (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Sales to unconsolidated affiliates | $ | 4,465 |  |  | $ | 4,970 |  |  | $ | 14,128 |  |  | $ | 20,608 |
Purchases from unconsolidated affiliates(a) | $ | 41,304 |  |  | $ | 60,136 |  |  | $ | 160,420 |  |  | $ | 186,111 |

(a) | Purchases from unconsolidated affiliates primarily relate to purchases from our Windfield joint venture.

Our condensed consolidated balance sheets include accounts receivable due from and payable to unconsolidated affiliates in the ordinary course of business as follows (in thousands):

| September 30, 2019 |  | December 31, 2018
Receivables from unconsolidated affiliates | $ | 3,041 |  |  | $ | 14,348 |
Payables to unconsolidated affiliates | $ | 32,699 |  |  | $ | 68,357 |

NOTE 16—Supplemental Cash Flow Information:
Supplemental information related to the condensed consolidated statements of cash flows is as follows (in thousands):

| Nine Months Ended September 30,
| 2019 |  | 2018
Supplemental non-cash disclosure related to investing activities: |  |  |
Capital expenditures included in Accounts payable | $ | 174,510 |  |  | $ | 107,385 |

Other, net within Cash flows from operating activities on the condensed consolidated statements of cash flows for the nine months ended September 30, 2019 and 2018 included $14.4 million and $33.9 million, respectively, representing the
23

Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
reclassification of the current portion of the one-time transition tax resulting from the enactment of the TCJA, from Other noncurrent liabilities to Income taxes payable within current liabilities.
NOTE 17—Recently Issued Accounting Pronouncements:
In February 2016, the Financial Accounting Standards Board (“FASB”) issued accounting guidance that requires assets and liabilities arising from leases to be recorded on the balance sheet. Additional disclosures are required regarding the amount, timing, and uncertainty of cash flows from leases. In July 2018, the FASB issued an amendment which would allow entities to initially apply this new standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of Retained earnings. The Company adopted this standard on January 1, 2019 using this transition method. See Note 1, “Basis of Presentation,” for further details.
In June 2016, the FASB issued accounting guidance that, among other things, changes the way entities recognize impairment of financial assets by requiring immediate recognition of estimated credit losses expected to occur over the remaining life of the financial asset. Additional disclosures are required regarding an entity’s assumptions, models and methods for estimating the expected credit loss. This guidance will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and is to be applied using a modified retrospective approach. Early adoption is permitted. We currently do not expect this guidance to have a significant impact on our financial statements.
In January 2017, the FASB issued accounting guidance to simplify the accounting for goodwill imp airment. The guidance removes Step 2 of the goodwill impairment test, which requires a reporting unit to calculate the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit has been acquired in a business combination. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. This guidance will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and is to be applied on a prospective basis. Early adoption is permitted for goodwill impairment tests performed after January 1, 2017. We expect to adopt this guidance on January 1, 2020 and do not expect it to have a significant impact on our financial statements.
In August 2017, the FASB issued accounting guidance to better align an entity’s risk management activities with hedge accounting, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. This guidance will make more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. In October 2018, the FASB issued additional guidance that permits the use of the Overnight Index Swap Rate based on the Secured Overnight Financing Rate as a U.S. benchmark interest rate for hedge accounting purposes under ASC 815, Derivatives and Hedging. These new requirements became effective on January 1, 2019 and did not have a significant impact on our financial statements.
In August 2018, the FASB issued accounting guidance that requires implementation costs incurred in a cloud computing arrangement that is a service contract to be capitalized. Entities will be required to recognize the capitalized implementation costs to expense over the noncancellable term of the cloud computing arrangement. As allowed by its provisions, we early-adopted this new guidance in the first quarter of 2019. The adoption of this new guidance did not have a significant impact on our financial statements.
NOTE 18—Subsequent Events:
On October 31, 2019, we completed the previously announced acquisition of a 60% interest in MRL’s Wodgina Project for a total purchase price of $1.3 billion. The purchase price is comprised of $820 million in cash, subject to certain adjustments, and the transfer of 40% interest in certain lithium hydroxide conversion assets being built by Albemarle in Kemerton, Western Australia, expected to be valued at $480 million. The cash consideration was funded by the 2019 Credit Facility entered into on August 14, 2019, see Note 8, “Long-Term Debt,” for further details.
In addition, we have formed an unincorporated joint venture with MRL for the exploration, development, mining, processing and production of lithium and other minerals (other than iron ore and tantalum) from the Wodgina Project and for the operation of the Kemerton assets. We are entitled to a pro rata portion of 60% of all minerals (other than iron ore and tantalum) recovered from the tenements and produced by the joint venture. These undivided interests will be accounted for using the proportionate consolidation method and our proportionate share of assets, liabilities, revenue and expenses will be included in the appropriate classifications in the condensed consolidated financial statements. As part of this acquisition,
24

Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
MARBL Lithium Operations Pty. Ltd. (the “Manager”), an incorporated joint venture, has been formed to manage the Wodgina Project. We will consolidate our 60% ownership interest in the Manager in our condensed consolidated financial statements.
Included in Selling, general and administrative expenses on our consolidated statements of income for the three and nine months ended September 30, 2019 is $1.3 million and $4.4 million, respectively, of costs directly related to this acquisition.
As this acquisition was completed on October 31, 2019, the preliminary fair value of the assets acquired and liabilities assumed are not recorded in the Company’s consolidated balance sheet as of September 30, 2019. The preliminary fair value of these assets and liabilities, as well as the results of operations of the formed joint venture, will be recorded in the fourth quarter of 2019. The Company has not completed the detailed valuation work necessary to arrive at the required estimates of the fair value of the assets acquired and liabilities assumed and the related allocation of purchase price.

Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-looking Statements
Some of the information presented in this Quarterly Report on Form 10-Q, including the documents incorporated by reference, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on our current expectations, which are in turn based on assumptions that we believe are reasonable based on our current knowledge of our business and operations. We have used words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “would,” “will” and variations of such words and similar expressions to identify such forward-looking statements.
These forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. There can be no assurance that our actual results will not differ materially from the results and expectations expressed or implied in the forward-looking statements. Factors that could cause actual results to differ materially from the outlook expressed or implied in any forward-looking statement include, without limitation:

• | changes in economic and business conditions;

• | changes in financial and operating performance of our major customers and industries and markets served by us;

• | the timing of orders received from customers;

• | the gain or loss of significant customers;

• | competition from other manufacturers;

• | changes in the demand for our products or the end-user markets in which our products are sold;

• | limitations or prohibitions on the manufacture and sale of our products;

• | availability of raw materials;

• | increases in the cost of raw materials and energy, and our ability to pass through such increases to our customers;

• | changes in our markets in general;

• | fluctuations in foreign currencies;

• | changes in laws and government regulation impacting our operations or our products;

• | the occurrence of regulatory actions, proceedings, claims or litigation;

• | the occurrence of cyber-security breaches, terrorist attacks, industrial accidents, natural disasters or climate change;

• | hazards associated with chemicals manufacturing;

• | the inability to maintain current levels of product or premises liability insurance or the denial of such coverage;

• | political unrest affecting the global economy, including adverse effects from terrorism or hostilities;

• | political instability affecting our manufacturing operations or joint ventures;

• | changes in accounting standards;

• | the inability to achieve results from our global manufacturing cost reduction initiatives as well as our ongoing continuous improvement and rationalization programs;

• | changes in the jurisdictional mix of our earnings and changes in tax laws and rates;

• | changes in monetary policies, inflation or interest rates that may impact our ability to raise capital or increase our cost of funds, impact the performance of our pension fund investments and increase our pension expense and funding obligations;

25

Table of Contents

• | volatility and uncertainties in the debt and equity markets;

• | technology or intellectual property infringement, including through cyber-security breaches, and other innovation risks;

• | decisions we may make in the future;

• | the ability to successfully execute, operate and integrate acquisitions and divestitures; and

• | the other factors detailed from time to time in the reports we file with the Securities and Exchange Commission (“SEC”).

We assume no obligation to provide revisions to any forward-looking statements should circumstances change, except as otherwise required by securities and other applicable laws. The following discussion should be read together with our condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q.
The following is a discussion and analysis of our results of operations for the three-month and nine-month periods ended September 30, 2019 and 2018. A discussion of our consolidated financial condition and sources of additional capital is included under a separate heading “Financial Condition and Liquidity.”
Overview
We are a leading global developer, manufacturer and marketer of highly-engineered specialty chemicals that are designed to meet our customers’ needs across a diverse range of end markets. The end markets we serve include energy storage, petroleum refining, consumer electronics, construction, automotive, lubricants, pharmaceuticals, crop protection and custom chemistry services. We believe that our commercial and geographic diversity, technical expertise, innovative capability, flexible, low-cost global manufacturing base, experienced management team and strategic focus on our core base technologies will enable us to maintain leading market positions in those areas of the specialty chemicals industry in which we operate.
Secular trends favorably impacting demand within the end markets that we serve combined with our diverse product portfolio, broad geographic presence and customer-focused solutions will continue to be key drivers of our future earnings growth. We continue to build upon our existing green solutions portfolio and our ongoing mission to provide innovative, yet commercially viable, clean energy products and services to the marketplace. We believe our disciplined cost reduction efforts and ongoing productivity improvements, among other factors, position us well to take advantage of strengthening economic conditions as they occur, while softening the negative impact of the current challenging global economic environment.
Third Quarter 2019
During the third quarter of 2019:

• | Our board of directors declared a quarterly dividend of $0.3675 per share on July 24, 2019, which was paid on October 1, 2019 to shareholders of record at the close of business as of September 13, 2019.

• | Our net sales for the quarter were $879.7 million, up 13% from net sales of $777.7 million in the third quarter of 2018.

• | Diluted earnings per share were $1.46, an increase from third quarter 2018 results of $1.20 per diluted share.

• | We announced a revised agreement with Mineral Resources Limited (“MRL”) to acquire 60% ownership of MRL’s Wodgina hard rock lithium mine in Western Australia (“Wodgina Project”) and form a 60%-40% joint venture with MRL to operate the mine and battery grade lithium hydroxide production facilities. Albemarle will pay $820 million in cash and transfer a 40% interest in certain lithium hydroxide conversion assets being built in Kemerton, Western Australia. This acquisition and joint venture transaction was completed on October 31, 2019.

• | On August 14, 2019, the Company entered into a $1.2 billion unsecured credit facility with several banks and other financial institutions. Borrowings under this facility bear interest at variable rates based on an average London inter-bank offered rate (“LIBOR”), plus an applicable margin that depends on certain credit ratings of the Company. As of the closing, the applicable margin over LIBOR was 1.125%. There were no borrowings outstanding as of September 30, 2019. In October 2019, we borrowed $1.0 billion under this credit facility to fund the cash portion of October 31, 2019 acquisition of a 60% interest in the Wodgina Project.

Outlook
The current global business environment presents a diverse set of opportunities and challenges in the markets we serve. In particular, the market demand for lithium battery and energy storage continues to accelerate, providing the opportunity to continue to develop high quality and innovative products while managing the high cost of expanding capacity. The other markets we serve continue to present various opportunities for value and growth as we have positioned ourselves to manage the impact on our business of changing global conditions, such as slow and uneven global growth, currency exchange volatility, crude oil price fluctuation, a dynamic pricing environment, an ever-changing landscape in electronics, the continuous need for
26

Table of Contents
cutting edge catalysts and technology by our refinery customers and increasingly stringent environmental standards. Amidst these dynamics, we believe our business fundamentals are sound and that we are strategically well-positioned as we remain focused on increasing sales volume, optimizing and improving the value of our portfolio primarily through pricing and product development, managing costs and delivering value to our customers and shareholders. We believe that our businesses remain well-positioned to capitalize on new business opportunities and long-term trends driving growth within our end markets and to respond quickly to changes in economic conditions in these markets.
Lithium: We expect strong year-over-year growth for the remainder of 2019 in Lithium, led by strong demand in battery-grade applications and increased conversion capacity. However, we expect pricing pressure in certain markets and the need to utilize tolled volume to meet customer commitments to impact Lithium performance during the remainder of the year.
On a longer term basis, we believe that demand for lithium will continue to grow as new lithium applications advance and the use of plug-in hybrid electric vehicles and full battery electric vehicles increases. This demand for lithium is supported by a favorable backdrop of steadily declining lithium ion battery costs, increasing battery performance and favorable global public policy toward e-mobility/renewable energy usage. Our outlook is also bolstered by long-term supply agreements with key strategic customers, reflecting our standing as a preferred global lithium partner, highlighted by our scale, access to geographically diverse, low-cost resources and long-term track record of reliability of supply and operating execution.
Bromine Specialties: We expect to see continued growth in net sales and profitability in 2019 due to healthy demand and pricing for our flame retardants and other derivatives. However, with sustained low oil prices, we expect stable, albeit low, drilling completion fluid demand throughout the year. While it is possible oil prices could continue to rebound some in 2019, the short-term impact will be to increase raw material costs. Offshore well completions lag oil pricing, so any benefit in completion fluid volume would likely extend throughout the year.
On a longer term basis, we continue to believe that improving global standards of living, widespread digitization, increasing demand for data management capacity and the potential for increasingly stringent fire safety regulations in developing markets are likely to drive continued demand for fire safety products. Absent an increase in regulatory pressure on offshore drilling, we would expect this business to follow a long-term growth trajectory once oil prices recover from prevailing levels as we expect that deep water drilling will continue to increase around the world. We are focused on profitably growing our globally competitive bromine and derivatives production network to serve all major bromine consuming products and markets. We believe the global supply/demand gap could tighten as demand for existing and possible new uses of bromine expands over time. The combination of our solid, long-term business fundamentals, strong cost position, product innovations and effective management of raw material costs will enable us to manage our business through end-market challenges and to capitalize on opportunities that are expected with favorable market trends in select end markets.
Catalysts: We believe increased global demand for transportation fuels, new refinery start-ups and ongoing adoption of cleaner fuels will be the primary drivers of growth in our Catalysts business. We believe delivering superior end-use performance continues to be the most effective way to create sustainable value in the refinery catalysts industry. We believe our technologies continue to provide significant performance and financial benefits to refiners challenged to meet tighter regulations around the world, including those managing new contaminants present in North America tight oil, and those in the Middle East and Asia seeking to use heavier feedstock while pushing for higher propylene yields. Longer term, we believe that the global crude supply will get heavier and more sour, a trend that bodes well for our catalysts portfolio. With superior technology and production capacities, and expected growth in end market demand, we believe that Catalysts remains well-positioned for the future. In Performance Catalyst Solutions (“PCS”), we expect growth on a longer term basis in our organometallic business due to growing global demand for plastics driven by rising standards of living and infrastructure spending.
All Other: The fine chemistry services business is reported outside the Company’s reportable segments as it does not fit in the Company’s core businesses. We expect the near future prospects for the fine chemistry services business to be impacted by a challenging agriculture industry environment and the timing of customer orders in pharmaceuticals. We continue to work to reinvigorate the pipeline of new products and services to these markets.
Corporate: In the first quarter of 2019, we increased our quarterly dividend rate to $0.3675 per share. We continue to focus on cash generation, working capital management and process efficiencies. We expect our global effective tax rate for 2019 to be between 18% and 19%; however, our rate will vary based on the locales in which income is actually earned and remains subject to potential volatility from changing legislation in the U.S., including the U.S. Tax Cuts and Jobs Act (“TCJA”), and other tax jurisdictions.
We remain committed to evaluating the merits of any opportunities that may arise for acquisitions or other business development activities that will complement our business footprint. Additional information regarding our products, markets and
27

Table of Contents
financial performance is provided at our website, www.albemarle.com. Our website is not a part of this document nor is it incorporated herein by reference.
Results of Operations
The following data and discussion provide an analysis of certain significant factors affecting our results of operations during the periods included in the accompanying consolidated statements of income.
Third Quarter 2019 Compared to Third Quarter 2018
Selected Financial Data (Unaudited)
Net Sales

In thousands | Q3 2019 |  | Q3 2018 |  | $ Change |  | % Change
Net sales | $ | 879,747 |  |  | $ | 777,748 |  |  | $ | 101,999 |  |  | 13 | %
▪ $91.6 million of higher sales volume in all businesses and $17.9 million of favorable pricing impacts, primarily in Lithium and Bromine Specialties ▪ $7.6 million of unfavorable currency exchange resulting from the stronger U.S. Dollar against various currencies

Gross Profit

In thousands | Q3 2019 |  | Q3 2018 |  | $ Change |  | % Change
Gross profit | $ | 309,867 |  |  | $ | 280,537 |  |  | $ | 29,330 |  |  | 10 | %
Gross profit margin | 35.2 | % |  | 36.1 | % |  |  |  |
▪ Higher sales volume in all businesses and favorable pricing impacts in Lithium and Bromine Specialties ▪ Higher tolled product costs in our Lithium segment to meet customer commitments and address operating issues in La Negra, Chile ▪ $7.0 million out-of-period non-cash expense recorded in the third quarter of 2019 in Cost of goods sold due to an adjustment of lithium carbonate inventory values in the second quarter of 2019

Selling, General and Administrative Expenses

In thousands | Q3 2019 |  | Q3 2018 |  | $ Change |  | % Change
Selling, general and administrative expenses | $ | 108,135 |  |  | $ | 100,167 |  |  | $ | 7,968 |  |  | 8 | %
Percentage of Net sales | 12.3 | % |  | 12.9 | % |  |  |  |
▪ Higher professional fees to support planned projects and higher compensation-related spend

Research and Development Expenses

In thousands | Q3 2019 |  | Q3 2018 |  | $ Change |  | % Change
Research and development expenses | $ | 15,585 |  |  | $ | 16,610 |  |  | $ | (1,025 | ) |  | (6 | )%
Percentage of Net sales | 1.8 | % |  | 2.1 | % |  |  |  |
▪ Lower third quarter spend in our Lithium and Catalysts segments

Interest and Financing Expenses

In thousands | Q3 2019 |  | Q3 2018 |  | $ Change |  | % Change
Interest and financing expenses | $ | (11,108 | ) |  | $ | (12,988 | ) |  | $ | 1,880 |  |  | (14 | )%
▪ Higher capitalized interest from an increase in capital expenditures in 2019, partially offset by higher commercial paper loan balances in 2019

28

Table of Contents
Other (Expenses) Income, Net

In thousands | Q3 2019 |  | Q3 2018 |  | $ Change |  | % Change
Other (expenses) income, net | $ | (11,316 | ) |  | $ | 3,793 |  |  | $ | (15,109 | ) |  | (398 | )%
▪ Increase in foreign exchange losses of $5.1 million ▪ Decrease in interest income due to lower cash balances ▪ $4.4 million decrease from the remeasurement of the fair value of our investment in private equity securities ▪ $3.1 million of unrecoverable vendor costs outside the operations of the business related to the construction of the future Kemerton production facility in 2019

Income Tax Expense

In thousands | Q3 2019 |  | Q3 2018 |  | $ Change |  | % Change
Income tax expense | $ | 25,341 |  |  | $ | 33,167 |  |  | $ | (7,826 | ) |  | (24 | )%
Effective income tax rate | 15.5 | % |  | 21.5 | % |  |  |  |
▪ Change in geographic mix of earnings, 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

Equity in Net Income of Unconsolidated Investments

In thousands | Q3 2019 |  | Q3 2018 |  | $ Change |  | % Change
Equity in net income of unconsolidated investments | $ | 33,236 |  |  | $ | 22,081 |  |  | $ | 11,155 |  |  | 51 | %
▪ Higher equity income reported by our Lithium segment joint venture, Windfield Holdings Pty. Ltd. ▪ Approximately $6.2 million of foreign currency losses

Net Income Attributable to Noncontrolling Interests

In thousands | Q3 2019 |  | Q3 2018 |  | $ Change |  | % Change
Net income attributable to noncontrolling interests | $ | (16,548 | ) |  | $ | (13,734 | ) |  | $ | (2,814 | ) |  | 20 | %
▪ Increase in consolidated income related to our JBC joint venture from higher sales volume

Net Income Attributable to Albemarle Corporation

In thousands | Q3 2019 |  | Q3 2018 |  | $ Change |  | % Change
Net income attributable to Albemarle Corporation | $ | 155,070 |  |  | $ | 129,745 |  |  | $ | 25,325 |  |  | 20 | %
Percentage of Net sales | 17.6 | % |  | 16.7 | % |  |  |  |
Basic earnings per share | $ | 1.46 |  |  | $ | 1.21 |  |  | $ | 0.25 |  |  | 21 | %
Diluted earnings per share | $ | 1.46 |  |  | $ | 1.20 |  |  | $ | 0.26 |  |  | 22 | %
▪ Higher sales volume in all businesses and favorable pricing impacts in Lithium and Bromine Specialties ▪ Lower effective tax rate in 2019 from a change in geographic mix of earnings ▪ Higher tolled product costs in Lithium to meet customer commitments and address operating issues in La Negra, Chile ▪ Increased Corporate costs for professional fees to support planned projects ▪ $3.8 million for the write-off of fixed assets related to a major capacity expansion in our Jordanian joint venture and $3.7 million of restructuring and other costs in 2018

29

Table of Contents
Other Comprehensive Loss, Net of Tax

In thousands | Q3 2019 |  | Q3 2018 |  | $ Change |  | % Change
Other comprehensive loss, net of tax | $ | (86,688 | ) |  | $ | (12,517 | ) |  | $ | (74,171 | ) |  | 593 | %
▪ Foreign currency translation | $ | (100,069 | ) |  | $ | (9,549 | ) |  | $ | (90,520 | ) |  | 948 | %
▪ 2019 included unfavorable movements in the Euro of approximately $83 million, the Chinese Renminbi of approximately $8 million, the Brazilian Real of approximately $7 million and a net unfavorable variance in various other currencies totaling approximately $2 million ▪ 2018 included unfavorable movements in the Chinese Renminbi of approximately $11 million, the Brazilian Real of approximately $3 million and a net unfavorable variance in various other currencies totaling approximately $4 million, partially offset by favorable movements in the Euro of approximately $8 million
▪ Net investment hedge | $ | 12,745 |  |  | $ | (3,621 | ) |  | $ | 16,366 |  |  | (452 | )%

Segment Information Overview. We have identified three reportable segments according to the nature and economic characteristics of our products as well as the manner in which the information is used internally by the Company’s chief operating decision maker to evaluate performance and make resource allocation decisions. Our reportable business segments consist of: (1) Lithium, (2) Bromine Specialties and (3) Catalysts.
Summarized financial information concerning our reportable segments is shown in the following tables. The “All Other” category includes only the fine chemistry services business, that does not fit into any of our core businesses.
The Corporate category is not considered to be a segment and includes corporate-related items not allocated to the operating segments. Pension and OPEB service cost (which represents the benefits earned by active employees during the period) and amortization of prior service cost or benefit are allocated to the reportable segments, All Other, and Corporate, whereas the remaining components of pension and OPEB benefits cost or credit (“Non-operating pension and OPEB items”) are included in Corporate. Segment data includes intersegment transfers of raw materials at cost and allocations for certain corporate costs.
The Company’s chief operating decision maker uses adjusted EBITDA (as defined below) to assess the ongoing performance of the Company’s business segments and to allocate resources. The Company defines adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, as adjusted on a consistent basis for certain non-recurring or unusual items in a balanced manner and on a segment basis. These non-recurring or unusual items may include acquisition and integration related costs, gains or losses on sales of businesses, restructuring charges, facility divestiture charges, non-operating pension and OPEB items and other significant non-recurring items. In addition, management uses adjusted EBITDA for business planning purposes and as a significant component in the calculation of performance-based compensation for management and other employees. The Company has reported adjusted EBITDA because management believes it provides transparency to investors and enables period-to-period comparability of financial performance. Adjusted EBITDA is a financial measure that is not required by, or presented in accordance with, U.S. GAAP. Adjusted EBITDA should not be considered as an alternative to Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP, or any other financial measure reported in accordance with U.S. GAAP.
30

Table of Contents

| Three Months Ended September 30, |  | Percentage Change
| 2019 |  | % |  | 2018 |  | % |  | 2019 vs 2018
| (In thousands, except percentages)
Net sales: |  |  |  |  |  |  |  |  |
Lithium | $ | 330,386 |  |  | 37.6 | % |  | $ | 270,928 |  |  | 34.8 | % |  | 22 | %
Bromine Specialties | 256,267 |  |  | 29.1 | % |  | 232,616 |  |  | 29.9 | % |  | 10 | %
Catalysts | 261,346 |  |  | 29.7 | % |  | 251,139 |  |  | 32.3 | % |  | 4 | %
All Other | 31,748 |  |  | 3.6 | % |  | 23,065 |  |  | 3.0 | % |  | 38 | %
Total net sales | $ | 879,747 |  |  | 100.0 | % |  | $ | 777,748 |  |  | 100.0 | % |  | 13 | %
Adjusted EBITDA: |  |  |  |  |  |  |  |  |
Lithium | $ | 127,459 |  |  | 50.1 | % |  | $ | 113,629 |  |  | 48.4 | % |  | 12 | %
Bromine Specialties | 88,814 |  |  | 34.9 | % |  | 78,585 |  |  | 33.4 | % |  | 13 | %
Catalysts | 66,944 |  |  | 26.3 | % |  | 62,602 |  |  | 26.6 | % |  | 7 | %
All Other | 10,448 |  |  | 4.1 | % |  | 3,968 |  |  | 1.7 | % |  | 163 | %
Corporate | (39,314 | ) |  | (15.4 | )% |  | (23,702 | ) |  | (10.1 | )% |  | 66 | %
Total adjusted EBITDA | $ | 254,351 |  |  | 100.0 | % |  | $ | 235,082 |  |  | 100.0 | % |  | 8 | %

See below for a reconciliation of adjusted EBITDA, the non-GAAP financial measure, from Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP, (in thousands):

| Lithium |  | Bromine Specialties |  | Catalysts |  | Reportable Segments Total |  | All Other |  | Corporate |  | Consolidated Total
Three months ended September 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) attributable to Albemarle Corporation | $ | 102,136 |  |  | $ | 75,224 |  |  | $ | 54,345 |  |  | $ | 231,705 |  |  | $ | 8,305 |  |  | $ | (84,940 | ) |  | $ | 155,070 |
Depreciation and amortization | 25,212 |  |  | 12,448 |  |  | 12,599 |  |  | 50,259 |  |  | 2,143 |  |  | 2,085 |  |  | 54,487 |
Acquisition and integration related costs(a) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,114 |  |  | 4,114 |
Interest and financing expenses | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 11,108 |  |  | 11,108 |
Income tax expense | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 25,341 |  |  | 25,341 |
Non-operating pension and OPEB items | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (551 | ) |  | (551 | )
Other(b) | 111 |  |  | 1,142 |  |  | — |  |  | 1,253 |  |  | — |  |  | 3,529 |  |  | 4,782 |
Adjusted EBITDA | $ | 127,459 |  |  | $ | 88,814 |  |  | $ | 66,944 |  |  | $ | 283,217 |  |  | $ | 10,448 |  |  | $ | (39,314 | ) |  | $ | 254,351 |
Three months ended September 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) attributable to Albemarle Corporation | $ | 90,313 |  |  | $ | 67,967 |  |  | $ | 50,491 |  |  | $ | 208,771 |  |  | $ | 1,978 |  |  | $ | (81,004 | ) |  | $ | 129,745 |
Depreciation and amortization | 23,370 |  |  | 10,618 |  |  | 12,111 |  |  | 46,099 |  |  | 1,990 |  |  | 1,618 |  |  | 49,707 |
Restructuring and other(c) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,724 |  |  | 3,724 |
Acquisition and integration related costs(a) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,305 |  |  | 4,305 |
Interest and financing expenses | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 12,988 |  |  | 12,988 |
Income tax expense | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 33,167 |  |  | 33,167 |
Non-operating pension and OPEB items | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,195 | ) |  | (2,195 | )
Legal accrual(d) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,017 | ) |  | (1,017 | )
Other(e) | (54 | ) |  | — |  |  | — |  |  | (54 | ) |  | — |  |  | 4,712 |  |  | 4,658 |
Adjusted EBITDA | $ | 113,629 |  |  | $ | 78,585 |  |  | $ | 62,602 |  |  | $ | 254,816 |  |  | $ | 3,968 |  |  | $ | (23,702 | ) |  | $ | 235,082 |

(a) | Included acquisition and integration related costs relating to various significant projects. For the three-month period ended September 30, 2019, $4.1 million was recorded in Selling, general and administrative expenses. For the three-month period ended September 30, 2018, $0.9 million was recorded in Cost of goods sold and $3.4 million was recorded in Selling, general and administrative expenses.

(b) | Included amounts for the three months ended September 30, 2019 recorded in:

▪ | Cost of goods sold - $0.1 million related to non-routine labor and compensation related costs in Chile that are outside normal compensation arrangements.

31

Table of Contents

▪ | Selling, general and administrative expenses - $1.1 million of a write-off of uncollectable accounts receivable from a terminated distributor in the Bromine Specialties segment.

▪ | Other (expenses) income, net - $3.1 million of unrecoverable vendor costs outside the operations of the business related to the construction of the future Kemerton production facility, as well as a net loss of $0.4 million primarily resulting from the settlement of legal matters related to previously disposed businesses or recorded in purchase accounting.

(c) | Severance payments as part of a business reorganization plan, recorded in Selling, general and administrative expenses.

(d) | Included in Other (expenses) income, net is a gain of $1.4 million resulting from a jury rendered verdict against Albemarle related to certain business concluded under a 2014 sales agreement for products that Albemarle no longer manufactures, partially offset by a $0.4 million expense resulting from a settlement of a legal matter related to guarantees from a previously disposed business.

(e) | Included amounts for the three months ended September 30, 2018 recorded in:

▪ | Cost of goods sold - $3.8 million for the write-off of fixed assets related to a major capacity expansion in our Jordanian joint venture.

▪ | Selling, general and administrative expenses - $0.1 million gain related to a refund from Chilean authorities due to an overpayment made in a prior year, partially offset by a $1.2 million contribution, using a portion of the proceeds received from the sale of the polyolefin catalysts and components portion of the PCS business (“Polyolefin Catalysts Divestiture”), to schools in the state of Louisiana for qualified tuition purposes. This contribution is significant in size and is intended to provide long-term benefits for families in the Louisiana community.

▪ | Other (expenses) income, net - $0.2 million gain related to the revision of previously recorded expenses of disposed businesses.

Lithium

In thousands | Q3 2019 |  | Q3 2018 |  | $ Change |  | % Change
Net sales | $ | 330,386 |  |  | $ | 270,928 |  |  | $ | 59,458 |  |  | 22 | %
▪ $59.5 million of higher sales volume, primarily in battery grade salts, despite deferred shipments due to disruption caused by Typhoon Tapah in Shanghai in late September. The impacted volume is expected to be fully recovered in the fourth quarter of 2019. ▪ $2.8 million of favorable pricing impacts, mainly on lithium hydroxide ▪ $3.0 million of unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
Adjusted EBITDA | $ | 127,459 |  |  | $ | 113,629 |  |  | $ | 13,830 |  |  | 12 | %
▪ Higher sales volume and favorable pricing impacts ▪ $4.0 million of favorable currency translation resulting from a weaker Chilean Peso ▪ Increased cost of goods sold, mainly related to higher tolling product costs to meet customer commitments and address operating issues in La Negra, Chile ▪ $7.0 million out-of-period non-cash expense recorded in the third quarter of 2019 in Cost of goods sold due to an adjustment of lithium carbonate inventory values in the second quarter of 2019

Bromine Specialties

In thousands | Q3 2019 |  | Q3 2018 |  | $ Change |  | % Change
Net sales | $ | 256,267 |  |  | $ | 232,616 |  |  | $ | 23,651 |  |  | 10 | %
▪ $16.4 million in favorable pricing and $8.6 million in higher sales volume in flame-retardants and other bromine derivatives due to continued strong demand ▪ $1.3 million of unfavorable currency translation resulting from the stronger U.S. Dollar
Adjusted EBITDA | $ | 88,814 |  |  | $ | 78,585 |  |  | $ | 10,229 |  |  | 13 | %
▪ Favorable pricing and higher sales volume

Catalysts

In thousands | Q3 2019 |  | Q3 2018 |  | $ Change |  | % Change
Net sales | $ | 261,346 |  |  | $ | 251,139 |  |  | $ | 10,207 |  |  | 4 | %
▪ $14.2 million of higher sales volume, mainly in our Clean Fuel Technology business, partially offset lower volumes in the Fluid Catalytic Cracking (“FCC”) Catalysts business related to delays in the start-up of new FCC units ▪ $0.7 million of unfavorable pricing impacts ▪ $3.2 million of unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
Adjusted EBITDA | $ | 66,944 |  |  | $ | 62,602 |  |  | $ | 4,342 |  |  | 7 | %
▪ Higher sales volume and a favorable product mix in the Clean Fuel Technology business ▪ Unfavorable pricing impacts ▪ Partial insurance claim reimbursement of $2.2 million received in 2018

32

Table of Contents
All Other

In thousands | Q3 2019 |  | Q3 2018 |  | $ Change |  | % Change
Net sales | $ | 31,748 |  |  | $ | 23,065 |  |  | $ | 8,683 |  |  | 38 | %
▪ Increased sales volume in our fine chemistry services business
Adjusted EBITDA | $ | 10,448 |  |  | $ | 3,968 |  |  | $ | 6,480 |  |  | 163 | %
▪ Increased sales volume in our fine chemistry services business ▪ $4.4 million decrease from the remeasurement of the fair value of our investment in private equity securities

Corporate

In thousands | Q3 2019 |  | Q3 2018 |  | $ Change |  | % Change
Adjusted EBITDA | $ | (39,314 | ) |  | $ | (23,702 | ) |  | $ | (15,612 | ) |  | 66 | %
▪ Higher selling, general and administrative spending related to professional fees to support planned projects ▪ $11.3 million of unfavorable currency exchange impacts, including approximately $6.2 million of foreign currency losses reported within Equity in net income of unconsolidated investments

Nine Months 2019 Compared to Nine Months 2018
Selected Financial Data (Unaudited)
Net Sales

In thousands | YTD 2019 |  | YTD 2018 |  | $ Change |  | % Change
Net sales | $ | 2,596,863 |  |  | $ | 2,453,251 |  |  | $ | 143,612 |  |  | 6 | %
▪ $140.3 million of higher sales volume and $67.4 million of favorable pricing impacts in all businesses ▪ $37.0 million of unfavorable currency exchange resulting from a stronger U.S. Dollar ▪ $27.1 million related to the Polyolefin Catalysts Divestiture

Gross Profit

In thousands | YTD 2019 |  | YTD 2018 |  | $ Change |  | % Change
Gross profit | $ | 919,267 |  |  | $ | 896,872 |  |  | $ | 22,395 |  |  | 2 | %
Gross profit margin | 35.4 | % |  | 36.6 | % |  |  |  |
▪ Higher sales volume and favorable pricing impacts in all businesses ▪ Higher input costs in our Lithium segment ▪ Higher raw material costs primarily in our Bromine Specialties and Catalysts segments ▪ $10.7 million related to the Polyolefin Catalysts Divestiture ▪ Unfavorable currency exchange impacts resulting from the stronger U.S. Dollar against various currencies

Selling, General and Administrative Expenses

In thousands | YTD 2019 |  | YTD 2018 |  | $ Change |  | % Change
Selling, general and administrative expenses | $ | 348,205 |  |  | $ | 325,174 |  |  | $ | 23,031 |  |  | 7 | %
Percentage of Net sales | 13.4 | % |  | 13.3 | % |  |  |  |
▪ $5.3 million of severance payments as part of a business reorganization plan in 2019 ▪ $4.2 million of increased acquisition and integration related costs ▪ Higher professional fees to support planned projects and compensation-related spend ▪ $16.2 million of charitable contributions in 2018 beyond the Company’s ordinary, recurring charitable contributions

Research and Development Expenses

In thousands | YTD 2019 |  | YTD 2018 |  | $ Change |  | % Change
Research and development expenses | $ | 44,024 |  |  | $ | 53,670 |  |  | $ | (9,646 | ) |  | (18 | )%
Percentage of Net sales | 1.7 | % |  | 2.2 | % |  |  |  |
▪ Lower spend in our Lithium and Catalysts segments

33

Table of Contents
Gain on Sale of Business

In thousands | YTD 2019 |  | YTD 2018 |  | $ Change |  | % Change
Gain on sale of business | $ | — |  |  | $ | (218,705 | ) |  | $ | 218,705 |  |  | (100 | )%
▪ Gain related to the Polyolefin Catalysts Divestiture, which closed in the second quarter of 2018

Interest and Financing Expenses

In thousands | YTD 2019 |  | YTD 2018 |  | $ Change |  | % Change
Interest and financing expenses | $ | (35,295 | ) |  | $ | (39,834 | ) |  | $ | 4,539 |  |  | (11 | )%
▪ Higher capitalized interest from a continued increase in capital expenditures in 2019, partially offset by higher commercial paper loan balances in 2019

Other Expenses, Net

In thousands | YTD 2019 |  | YTD 2018 |  | $ Change |  | % Change
Other expenses, net | $ | (7,090 | ) |  | $ | (31,906 | ) |  | $ | 24,816 |  |  | (78 | )%
▪ $11.1 million gain related to the sale of land in Pasadena, Texas ▪ $27.0 million of legal expenses in 2018, related to products that Albemarle no longer manufactures and a previously disposed business ▪ $15.6 million in 2018 related to environmental charges related to a site formerly owned by Albemarle ▪ Increase in foreign exchange losses of $15.7 million ▪ $4.4 million decrease from the remeasurement of the fair value of our investment in private equity securities

Income Tax Expense

In thousands | YTD 2019 |  | YTD 2018 |  | $ Change |  | % Change
Income tax expense | $ | 93,266 |  |  | $ | 133,630 |  |  | $ | (40,364 | ) |  | (30 | )%
Effective income tax rate | 19.2 | % |  | 20.1 | % |  |  |  |
▪ Change in geographic mix of earnings, mainly attributable to our share of the income of our JBC joint venture, a Free Zones company under the laws of the Hashemite Kingdom of Jordan ▪ $30.4 million of discrete net tax expense in 2018, primarily related to the Polyolefin Catalysts Divestiture

Equity in Net Income of Unconsolidated Investments

In thousands | YTD 2019 |  | YTD 2018 |  | $ Change |  | % Change
Equity in net income of unconsolidated investments | $ | 106,727 |  |  | $ | 61,727 |  |  | $ | 45,000 |  |  | 73 | %
▪ Higher equity income reported by our Lithium segment joint venture, Windfield Holdings Pty. Ltd. ▪ Approximately $6.2 million of foreign currency losses

Net Income Attributable to Noncontrolling Interests

In thousands | YTD 2019 |  | YTD 2018 |  | $ Change |  | % Change
Net income attributable to noncontrolling interests | $ | (55,277 | ) |  | $ | (29,124 | ) |  | $ | (26,153 | ) |  | 90 | %
▪ Increase in consolidated income related to our JBC joint venture from higher sales volume in the current year

34

Table of Contents
Net Income Attributable to Albemarle Corporation

In thousands | YTD 2019 |  | YTD 2018 |  | $ Change |  | % Change
Net income attributable to Albemarle Corporation | $ | 442,837 |  |  | $ | 563,966 |  |  | $ | (121,129 | ) |  | (21 | )%
Percentage of Net sales | 17.1 | % |  | 23.0 | % |  |  |  |
Basic earnings per share | $ | 4.18 |  |  | $ | 5.16 |  |  | $ | (0.98 | ) |  | (19 | )%
Diluted earnings per share | $ | 4.16 |  |  | $ | 5.11 |  |  | $ | (0.95 | ) |  | (19 | )%
▪ After tax gain in 2018 of $176.7 million related to the Polyolefin Catalysts Divestiture ▪ Higher input costs in Lithium ▪ Increased Corporate costs for professional fees to support planned projects ▪ Unfavorable currency exchange impact ▪ Higher sales volume and favorable pricing impacts in all businesses ▪ $27.0 million of legal expenses in 2018 related to products that Albemarle no longer manufactures and a previously disposed business ▪ $16.2 million of charitable contributions in 2018 beyond the Company’s ordinary, recurring charitable contributions ▪ $15.6 million in 2018 related to environmental charges related to a site formerly owned by Albemarle

Other Comprehensive Loss, Net of Tax

In thousands | YTD 2019 |  | YTD 2018 |  | $ Change |  | % Change
Other comprehensive loss, net of tax | $ | (85,437 | ) |  | $ | (88,605 | ) |  | $ | 3,168 |  |  | (4 | )%
▪ Foreign currency translation | $ | (100,380 | ) |  | $ | (95,515 | ) |  | $ | (4,865 | ) |  | 5 | %
▪ 2019 included unfavorable movements in the Euro of approximately $85 million, the Chinese Renminbi of approximately $9 million, the Brazilian Real of approximately $6 million and the Korean Won of approximately $3 million, partially offset by a net favorable variance in various other currencies totaling approximately $2 million ▪ 2018 included unfavorable movements in the Euro of approximately $55 million, the Brazilian Real of approximately $15 million, the Chinese Renminbi of approximately $15 million, the Korean Won of approximately $4 million and a net unfavorable variance in various other currencies totaling approximately $6 million
▪ Net investment hedge | $ | 13,012 |  |  | $ | 4,947 |  |  | $ | 8,065 |  |  | 163 | %

Segment Information Overview. Summarized financial information concerning our reportable segments is shown in the following tables. The “All Other” category includes only the fine chemistry services business, that does not fit into any of our core businesses.

| Nine Months Ended September 30, |  | Percentage Change
| 2019 |  | % |  | 2018 |  | % |  | 2019 vs. 2018
| (In thousands, except percentages)
Net sales: |  |  |  |  |  |  |  |  |
Lithium | $ | 947,030 |  |  | 36.5 | % |  | $ | 886,523 |  |  | 36.1 | % |  | 7 | %
Bromine Specialties | 760,752 |  |  | 29.3 | % |  | 678,769 |  |  | 27.7 | % |  | 12 | %
Catalysts | 779,295 |  |  | 30.0 | % |  | 796,822 |  |  | 32.5 | % |  | (2 | )%
All Other | 109,786 |  |  | 4.2 | % |  | 90,978 |  |  | 3.7 | % |  | 21 | %
Corporate | — |  |  | — | % |  | 159 |  |  | — | % |  | (100 | )%
Total net sales | $ | 2,596,863 |  |  | 100.0 | % |  | $ | 2,453,251 |  |  | 100.0 | % |  | 6 | %
Adjusted EBITDA: |  |  |  |  |  |  |  |  |
Lithium | $ | 384,854 |  |  | 51.9 | % |  | $ | 386,260 |  |  | 52.0 | % |  | — | %
Bromine Specialties | 248,743 |  |  | 33.5 | % |  | 217,921 |  |  | 29.4 | % |  | 14 | %
Catalysts | 193,890 |  |  | 26.1 | % |  | 205,534 |  |  | 27.7 | % |  | (6 | )%
All Other | 28,931 |  |  | 3.9 | % |  | 7,729 |  |  | 1.0 | % |  | 274 | %
Corporate | (114,300 | ) |  | (15.4 | )% |  | (75,082 | ) |  | (10.1 | )% |  | 52 | %
Total adjusted EBITDA | $ | 742,118 |  |  | 100.0 | % |  | $ | 742,362 |  |  | 100.0 | % |  | — | %

35

Table of Contents
See below for a reconciliation of adjusted EBITDA, the non-GAAP financial measure, from Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP, (in thousands):

| Lithium |  | Bromine Specialties |  | Catalysts |  | Reportable Segments Total |  | All Other |  | Corporate |  | Consolidated Total
Nine months ended September 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) attributable to Albemarle Corporation | $ | 312,609 |  |  | $ | 212,320 |  |  | $ | 156,328 |  |  | $ | 681,257 |  |  | $ | 22,629 |  |  | $ | (261,049 | ) |  | $ | 442,837 |
Depreciation and amortization | 71,669 |  |  | 35,281 |  |  | 37,562 |  |  | 144,512 |  |  | 6,302 |  |  | 5,904 |  |  | 156,718 |
Acquisition and integration related costs(a) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 14,388 |  |  | 14,388 |
Gain on sale of property(b) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (11,079 | ) |  | (11,079 | )
Interest and financing expenses | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 35,295 |  |  | 35,295 |
Income tax expense | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 93,266 |  |  | 93,266 |
Non-operating pension and OPEB items | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,810 | ) |  | (1,810 | )
Other(c) | 576 |  |  | 1,142 |  |  | — |  |  | 1,718 |  |  | — |  |  | 10,785 |  |  | 12,503 |
Adjusted EBITDA | $ | 384,854 |  |  | $ | 248,743 |  |  | $ | 193,890 |  |  | $ | 827,487 |  |  | $ | 28,931 |  |  | $ | (114,300 | ) |  | $ | 742,118 |
Nine months ended September 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) attributable to Albemarle Corporation | $ | 315,939 |  |  | $ | 187,176 |  |  | $ | 387,038 |  |  | $ | 890,153 |  |  | $ | 1,659 |  |  | $ | (327,846 | ) |  | $ | 563,966 |
Depreciation and amortization | 71,760 |  |  | 30,745 |  |  | 37,201 |  |  | 139,706 |  |  | 6,070 |  |  | 4,735 |  |  | 150,511 |
Restructuring and other(d) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,724 |  |  | 3,724 |
Gain on sale of business(e) | — |  |  | — |  |  | (218,705 | ) |  | (218,705 | ) |  | — |  |  | — |  |  | (218,705 | )
Acquisition and integration related costs(a) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 13,016 |  |  | 13,016 |
Interest and financing expenses | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 39,834 |  |  | 39,834 |
Income tax expense | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 133,630 |  |  | 133,630 |
Non-operating pension and OPEB items | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (6,596 | ) |  | (6,596 | )
Legal accrual(f) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 27,027 |  |  | 27,027 |
Environmental accrual(g) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 15,597 |  |  | 15,597 |
Albemarle Foundation contribution(h) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 15,000 |  |  | 15,000 |
Other(i) | (1,439 | ) |  | — |  |  | — |  |  | (1,439 | ) |  | — |  |  | 6,797 |  |  | 5,358 |
Adjusted EBITDA | $ | 386,260 |  |  | $ | 217,921 |  |  | $ | 205,534 |  |  | $ | 809,715 |  |  | $ | 7,729 |  |  | $ | (75,082 | ) |  | $ | 742,362 |

(a) | Included acquisition and integration related costs relating to various significant projects. For the nine-month period ended September 30, 2019, $14.4 million was recorded in Selling, general and administrative expenses. For the nine-month period ended September 30, 2018, $2.9 million was recorded in Cost of goods sold and $10.2 million was recorded in Selling, general and administrative expenses.

(b) | Gain recorded in Other expenses, net related to the sale of land in Pasadena, Texas not used as part of our operations.

(c) | Included amounts for the nine months ended September 30, 2019 recorded in:

▪ | Cost of goods sold - $0.6 million related to non-routine labor and compensation related costs in Chile that are outside normal compensation arrangements.

▪ | Selling, general and administrative expenses - Expected severance payments to be made in 2019 as part of a business reorganization plan of $5.3 million, with the unpaid balance recorded in Accrued expenses as of September 30, 2019, $1.0 million of shortfall contributions for our multiemployer plan financial improvement plan, and $1.1 million of a write off of uncollectable accounts receivable from a terminated distributor in the Bromine Specialties segment.

▪ | Other expenses, net - $3.1 million of unrecoverable vendor costs outside the operations of the business related to the construction of the future Kemerton production facility, a net loss of $0.4 million primarily resulting from the settlement of legal matters related to previously disposed businesses or recorded in purchase accounting, and $0.9 million of a net loss primarily resulting from the revision of indemnifications and other liabilities related to previously disposed businesses.

(d) | Severance payments as part of a business reorganization plan, recorded in Selling, general and administrative expenses.

(e) | See “Gain on Sale of Business” on page 34 for a description of this gain.

(f) | Included in Other expenses, net is a $16.2 million expense resulting from a jury rendered verdict against Albemarle related to certain business concluded under a 2014 sales agreement for products that Albemarle no longer manufactures and a $10.8 million expense resulting from a settlement of a legal matter related to guarantees from a previously disposed business.

(g) | Increase in environmental reserve to indemnify the buyer of a formerly owned site recorded in Other expenses, net. As defined in the agreement of sale, this indemnification has a set cutoff date in 2024, at which point we will no longer be required to provide financial coverage.

(h) | Included in Selling, general and administrative expenses is a charitable contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to the Albemarle Foundation, a non-profit organization that sponsors grants, health and social projects, educational initiatives, disaster relief, matching gift programs, scholarships and other charitable initiatives in locations where our

36

Table of Contents
employees live and operate. This contribution is in addition to the ordinary annual contribution made to the Albemarle Foundation by the Company, and is significant in size and nature in that it is intended to provide more long-term benefits in the communities where we live and operate.

(i) | Included amounts for the nine months ended September 30, 2018 recorded in:

▪ | Cost of goods sold - $4.9 million for the write-off of fixed assets related to a major capacity expansion in our Jordanian joint venture.

▪ | Selling, general and administrative expenses - $1.5 million gain related to a refund from Chilean authorities due to an overpayment made in a prior year, partially offset by a $1.2 million contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to schools in the state of Louisiana for qualified tuition purposes. This contribution is significant in size and is intended to provide long-term benefits for families in the Louisiana community.

▪ | Other expenses, net - $0.8 million related to the revision of previously recorded expenses of disposed businesses.

Lithium

In thousands | YTD 2019 |  | YTD 2018 |  | $ Change |  | % Change
Net sales | $ | 947,030 |  |  | $ | 886,523 |  |  | $ | 60,507 |  |  | 7 | %
▪ $59.5 million in higher sales volume, primarily in battery grade salts ▪ $16.7 million of favorable pricing impacts, mainly on lithium hydroxide ▪ $16.0 million of unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
Adjusted EBITDA | $ | 384,854 |  |  | $ | 386,260 |  |  | $ | (1,406 | ) |  | — | %
▪ Increased cost of goods sold, mainly related to higher input costs ▪ Higher sales volume and favorable pricing impacts, mainly on lithium hydroxide ▪ $6.2 million of favorable currency translation resulting from a weaker Chilean Peso

Bromine Specialties

In thousands | YTD 2019 |  | YTD 2018 |  | $ Change |  | % Change
Net sales | $ | 760,752 |  |  | $ | 678,769 |  |  | $ | 81,983 |  |  | 12 | %
▪ $47.7 million in higher sales volume and $42.2 million in favorable pricing impacts in flame retardants and other bromine derivatives due to continued strong demand ▪ $7.8 million of unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
Adjusted EBITDA | $ | 248,743 |  |  | $ | 217,921 |  |  | $ | 30,822 |  |  | 14 | %
▪ Higher sales volume and favorable pricing impacts ▪ Higher production and raw material costs ▪ $5.4 million of unfavorable currency translation

Catalysts

In thousands | YTD 2019 |  | YTD 2018 |  | $ Change |  | % Change
Net sales | $ | 779,295 |  |  | $ | 796,822 |  |  | $ | (17,527 | ) |  | (2 | )%
▪ $27.1 million impact of the Polyolefin Catalysts Divestiture ▪ $13.2 million of unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies ▪ $15.5 million of higher sales volume and favorable pricing impacts of $7.4 million
Adjusted EBITDA | $ | 193,890 |  |  | $ | 205,534 |  |  | $ | (11,644 | ) |  | (6 | )%
▪ $10.9 million impact of the Polyolefin Catalysts Divestiture ▪ Higher raw material costs ▪ $5.7 million of unfavorable currency translation ▪ Higher sales volume and favorable pricing impacts ▪ Partial insurance claim reimbursement of $4.2 million received in 2018

All Other

In thousands | YTD 2019 |  | YTD 2018 |  | $ Change |  | % Change
Net sales | $ | 109,786 |  |  | $ | 90,978 |  |  | $ | 18,808 |  |  | 21 | %
▪ Higher sales volume and favorable pricing impacts in our fine chemistry services business
Adjusted EBITDA | $ | 28,931 |  |  | $ | 7,729 |  |  | $ | 21,202 |  |  | 274 | %
▪ Increased sales volume and favorable pricing impacts in our fine chemistry services business ▪ $4.4 million decrease from the remeasurement of the fair value of our investment in private equity securities

37

Table of Contents
Corporate

In thousands | YTD 2019 |  | YTD 2018 |  | $ Change |  | % Change
Adjusted EBITDA | $ | (114,300 | ) |  | $ | (75,082 | ) |  | $ | (39,218 | ) |  | 52 | %
▪ Higher selling, general and administrative spending related to professional fees to support planned projects ▪ $21.9 million of unfavorable currency exchange impacts, including approximately $6.2 million of foreign currency losses reported within Equity in net income of unconsolidated investments

Financial Condition and Liquidity
Overview
The principal uses of cash in our business generally have been capital investments and resource development costs, funding working capital and service of debt. We also make contributions to our defined benefit pension plans, pay dividends to our shareholders and repurchase shares of our common stock. Historically, cash to fund the needs of our business has been principally provided by cash from operations, debt financing and equity issuances.
We are continually focused on working capital efficiency particularly in the areas of accounts receivable and inventory. We anticipate that cash on hand, cash provided by operating activities, proceeds from divestitures and borrowings will be sufficient to pay our operating expenses, satisfy debt service obligations, fund capital expenditures and other investing activities, fund pension contributions and pay dividends for the foreseeable future.
Cash Flow
During the first nine months of 2019, cash on hand, cash provided by operations and commercial paper note borrowings funded $608.5 million of capital expenditures for plant, machinery and equipment, and dividends to shareholders of $113.3 million. Our operations provided $345.6 million of cash flows during the first nine months of 2019, as compared to $376.9 million for the first nine months of 2018, with the decrease primarily arising from a higher working capital outflow and lower cash earnings in Catalysts. This was partially offset by higher dividends received from unconsolidated investments, as well as increased cash earnings in Bromine Specialties. Our outflow from working capital changes in 2019 of $289.6 million was primarily due to the build-up of inventory in the Lithium and Catalysts segments to meet higher projected sales during the remainder of 2019, the timing on collection of certain receivables and higher cash taxes paid. Overall, our cash and cash equivalents decreased by $237.5 million to $317.8 million at September 30, 2019 from $555.3 million at December 31, 2018.
Capital expenditures for the nine-month period ended September 30, 2019 of $608.5 million were associated with plant, machinery and equipment. We expect our capital expenditures to approximate between $900 million to $950 million in 2019 for Lithium growth and capacity increases, as well as productivity and continuity of operations projects in all segments. Of the total capital expenditures, our projects related to the continuity of operations are expected to remain in the range of 4-6% of net sales, similar to prior years.
Net current assets were $548.5 million and $815.2 million at September 30, 2019 and December 31, 2018, respectively. The decrease is primarily due to the increase in commercial paper notes outstanding and the reduction in cash and cash equivalents used primarily to fund the increase in capital expenditures during 2019. Additional changes in the components of net current assets are primarily due to the timing of the sale of goods and other ordinary transactions leading up to the balance sheet dates. The additional changes are not the result of any policy changes by the Company, and do not reflect any change in either the quality of our net current assets or our expectation of success in converting net working capital to cash in the ordinary course of business.
On February 26, 2019, we increased our quarterly dividend rate to $0.3675 per share, a 10% increase from the quarterly rate of $0.335 per share paid in 2018.
At September 30, 2019 and December 31, 2018, our cash and cash equivalents included $296.0 million and $525.8 million, respectively, held by our foreign subsidiaries. The majority of these foreign cash balances are associated with earnings that we have asserted are indefinitely reinvested and which we plan to use to support our continued growth plans outside the U.S. through funding of capital expenditures, acquisitions, research, operating expenses or other similar cash needs of our foreign operations. From time to time, we repatriate cash associated with earnings from our foreign subsidiaries to the U.S. for normal operating needs through intercompany dividends, but only from subsidiaries whose earnings we have not asserted to be indefinitely reinvested or whose earnings qualify as “previously taxed income” as defined by the Internal Revenue Code. During the first nine months of 2019 and 2018, we repatriated $9.3 million and $621.8 million, respectively, of cash as part of these foreign earnings cash repatriation activities.
38

Table of Contents
On October 31, 2019, we completed the previously announced acquisition of a 60% interest in the Wodgina Project for a total purchase price of $1.3 billion. The purchase price comprised $820 million in cash, subject to certain adjustments, and the transfer of 40% interest in certain lithium hydroxide conversion assets being built by Albemarle in Kemerton, Western Australia, valued at $480 million. The cash consideration was funded by the unsecured credit facility entered into on August 14, 2019.
While we continue to closely monitor our cash generation, working capital management and capital spending in light of continuing uncertainties in the global economy, we believe that we will continue to have the financial flexibility and capability to opportunistically fund future growth initiatives. Additionally, we anticipate that future capital spending, including business acquisitions, share repurchases and other cash outlays, should be financed primarily with cash flow provided by operations and cash on hand, with additional cash needed, if any, provided by borrowings. The amount and timing of any additional borrowings will depend on our specific cash requirements.
Long-Term Debt
We currently have the following senior notes outstanding:

Issue Month/Year |  | Principal (in millions) |  | Interest Rate |  | Interest Payment Dates |  | Maturity Date
December 2014 |  | €393.0 |  | 1.875% |  | December 8 |  | December 8, 2021
November 2014 |  | $425.0 |  | 4.15% |  | June 1 | December 1 |  | December 1, 2024
November 2014 |  | $350.0 |  | 5.45% |  | June 1 | December 1 |  | December 1, 2044
December 2010 |  | $175.3 |  | 4.50% |  | June 15 | December 15 |  | December 15, 2020

Our senior notes are senior unsecured obligations and rank equally with all our other senior unsecured indebtedness from time to time outstanding. The senior notes are effectively subordinated to any of our existing or future secured indebtedness and to the existing and future indebtedness of our subsidiaries. As is customary for such long-term debt instruments, each senior note outstanding has terms that allow us to redeem the notes before its maturity, in whole at any time or in part from time to time, at a redemption price equal to the greater of (i) 100% of the principal amount of the senior notes to be redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semi-annual basis using the comparable government rate (as defined in the indentures governing the senior notes) plus between 25 and 40 basis points, depending on the note, plus, in each case, accrued interest thereon to the date of redemption. Holders may require us to purchase such notes at 101% upon a change of control triggering event, as defined in the indentures. The senior notes are subject to typical events of default, including bankruptcy and insolvency events, nonpayment and the acceleration of certain subsidiary indebtedness of $40 million or more caused by a nonpayment default.
Our revolving, unsecured credit agreement dated as of June 21, 2018, as amended on August 14, 2019 (the “2018 Credit Agreement”), currently provides for borrowings of up to $1.0 billion and matures on August 9, 2024. Borrowings under the 2018 Credit Agreement bear interest at variable rates based on an average LIBOR for deposits in the relevant currency plus an applicable margin which ranges from 0.910% to 1.500%, depending on the Company’s credit rating from Standard & Poor’s Ratings Services, Moody’s Investors Services and Fitch Ratings. The applicable margin on the facility was 1.125% as of September 30, 2019. There were no borrowings outstanding under the 2018 Credit Agreement as of September 30, 2019.
On August 14, 2019, the Company entered into a $1.2 billion unsecured credit facility (the “2019 Credit Facility”) with the several banks and other financial institutions. The lenders’ commitment to provide loans under the 2019 Credit Facility terminates on August 11, 2020, with each such loan maturing one year after the funding of such loan. The Company can request that the maturity date of loans be extended for an additional period of up to four additional years, but any such extension is subject to the approval of the lenders. Borrowings under the 2019 Credit Facility bear interest at variable rates based on an average LIBOR for deposits in the relevant currency plus an applicable margin which ranges from 0.875% to 1.625%, depending on the Company’s credit rating from Standard & Poor’s Financial Services LLC, Moody’s Investor Services, Inc. and Fitch Ratings, Inc. As of the closing of the 2019 Credit Facility, the applicable margin over LIBOR was 1.125%. There were no borrowings outstanding under the 2019 Credit Facility as of September 30, 2019. In October 2019, we borrowed $1.0 billion under this credit facility to fund the cash portion of the October 31, 2019 acquisition of a 60% interest in MRL’s Wodgina Project and for general corporate purposes.
Borrowings under the 2019 Credit Facility and 2018 Credit Agreement (together “the Credit Agreements”) are conditioned upon satisfaction of certain conditions precedent, including the absence of defaults. The Company is subject to one financial covenant, as well as customary affirmative and negative covenants. The financial covenant requires that the Company’s consolidated funded debt to consolidated EBITDA ratio (as such terms are defined in the Credit Agreements) to be
39

Table of Contents
less than or equal to 3.50:1, subject to adjustments in accordance with the terms of the Credit Agreements relating to a consummation of an acquisition where the consideration includes cash proceeds from issuance of funded debt in excess of $500 million. The Credit Agreements also contain customary default provisions, including defaults for non-payment, breach of representations and warranties, insolvency, non-performance of covenants and cross-defaults to other material indebtedness. The occurrence of an event of default under the Credit Agreements could result in all loans and other obligations becoming immediately due and payable and the credit facility being terminated. Certain representations, warranties and covenants under the 2018 Credit Agreement were conformed to those under the 2019 Credit Facility following an amendment entered into on August 14, 2019.
On May 29, 2013, we entered into agreements to initiate a commercial paper program on a private placement basis under which we may issue unsecured commercial paper notes (the “Commercial Paper Notes”) from time-to-time up to a maximum aggregate principal amount outstanding at any time of $750.0 million. The proceeds from the issuance of the Commercial Paper Notes are expected to be used for general corporate purposes, including the repayment of other debt of the Company. Our 2018 Credit Agreement is available to repay the Commercial Paper Notes, if necessary. Aggregate borrowings outstanding under the 2018 Credit Agreement and the Commercial Paper Notes will not exceed the $1.0 billion current maximum amount available under the 2018 Credit Agreement. The Commercial Paper Notes will be sold at a discount from par, or alternatively, will be sold at par and bear interest at rates that will vary based upon market conditions at the time of issuance. The maturities of the Commercial Paper Notes will vary but may not exceed 397 days from the date of issue. The definitive documents relating to the commercial paper program contain customary representations, warranties, default and indemnification provisions. At September 30, 2019, we had $539.3 million of Commercial Paper Notes outstanding bearing a weighted-average interest rate of approximately 2.28% and a weighted-average maturity of 31 days. The Commercial Paper Notes are classified as Current portion of long-term debt in our condensed consolidated balance sheets at September 30, 2019 and December 31, 2018.
The non-current portion of our long-term debt amounted to $1.38 billion at September 30, 2019, compared to $1.40 billion at December 31, 2018. In addition, at September 30, 2019, we had availability to borrow $1.66 billion under our commercial paper program and the Credit Agreements, and $286.7 million under other existing lines of credit, subject to various financial covenants under our Credit Agreements. We have the ability and intent to refinance our borrowings under our other existing credit lines with borrowings under the 2018 Credit Agreement, as applicable. Therefore, the amounts outstanding under those credit lines, if any, are classified as long-term debt. We believe that as of September 30, 2019, we were, and currently are, in compliance with all of our long-term debt covenants.
Off-Balance Sheet Arrangements
In the ordinary course of business with customers, vendors and others, we have entered into off-balance sheet arrangements, including bank guarantees and letters of credit, which totaled approximately $79.5 million at September 30, 2019. None of these off-balance sheet arrangements has, or is likely to have, a material effect on our current or future financial condition, results of operations, liquidity or capital resources.
Other Obligations
Our contractual obligations have not significantly changed based on our ordinary business activities and projected capital expenditures from the information we provided in our Annual Report on Form 10-K for the year ended December 31, 2018.
Total expected 2019 contributions to our domestic and foreign qualified and nonqualified pension plans, including our SERP, should approximate $12 million. We may choose to make additional pension contributions in excess of this amount. We have made contributions of $8.6 million to our domestic and foreign pension plans (both qualified and nonqualified) during the nine-month period ended September 30, 2019.
The liability related to uncertain tax positions, including interest and penalties, recorded in Other noncurrent liabilities totaled $26.0 million at September 30, 2019 and $22.9 million at December 31, 2018. Related assets for corresponding offsetting benefits recorded in Other assets totaled $12.1 million at September 30, 2019 and $13.0 million at December 31, 2018. We cannot estimate the amounts of any cash payments associated with these liabilities for the remainder of 2019 or the next twelve months, and we are unable to estimate the timing of any such cash payments in the future at this time.
We are subject to federal, state, local and foreign requirements regulating the handling, manufacture and use of materials (some of which may be classified as hazardous or toxic by one or more regulatory agencies), the discharge of materials into the environment and the protection of the environment. To our knowledge, we are currently complying, and expect to continue to comply, in all material respects with applicable environmental laws, regulations, statutes and ordinances. Compliance with existing federal, state, local and foreign environmental protection laws is not expected to have a material effect on capital expenditures, earnings or our competitive position, but the costs associated with increased legal or regulatory requirements could have an adverse effect on our operating results.
40

Table of Contents
Among other environmental requirements, we are subject to the federal Superfund law, and similar state laws, under which we may be designated as a potentially responsible party (“PRP”), and may be liable for a share of the costs associated with cleaning up various hazardous waste sites. Management believes that in cases in which we may have liability as a PRP, our liability for our share of cleanup is de minimis. Further, almost all such sites represent environmental issues that are quite mature and have been investigated, studied and in many cases settled. In de minimis situations, our policy generally is to negotiate a consent decree and to pay any apportioned settlement, enabling us to be effectively relieved of any further liability as a PRP, except for remote contingencies. In other than de minimis PRP matters, our records indicate that unresolved PRP exposures should be immaterial. We accrue and expense our proportionate share of PRP costs. Because management has been actively involved in evaluating environmental matters, we are able to conclude that the outstanding environmental liabilities for unresolved PRP sites should not have a material adverse effect upon our results of operations or financial condition.
Liquidity Outlook
We anticipate that cash on hand and cash provided by operating activities, divestitures and borrowings will be sufficient to pay our operating expenses, satisfy debt service obligations, fund any capital expenditures and share repurchases, make acquisitions, make pension contributions and pay dividends for the foreseeable future. Our main focus over the next three years, in terms of uses of cash, will be investing in growth of the businesses and the return of value to shareholders. Additionally, we will continue to evaluate the merits of any opportunities that may arise for acquisitions of businesses or assets, which may require additional liquidity. For example, we funded the cash portion of the October 31, 2019 acquisition of 60% ownership of the Wodgina Project of $820 million with new debt borrowings.
Our cash flows from operations may be negatively affected by adverse consequences to our customers and the markets in which we compete as a result of moderating global economic conditions and reduced capital availability.
While we maintain business relationships with a diverse group of financial institutions, an adverse change in their credit standing could lead them to not honor their contractual credit commitments, decline funding under existing but uncommitted lines of credit, not renew their extensions of credit or not provide new financing. While the global corporate bond and bank loan markets remain strong, periods of elevated uncertainty related to global economic and/or geopolitical concerns may limit efficient access to such markets for extended periods of time. If such concerns heighten, we may incur increased borrowing costs and reduced credit capacity as our various credit facilities mature. When the U.S. Federal Reserve or similar national reserve banks in other countries decide to tighten the monetary supply in response, for example, to improving economic conditions, we may incur increased borrowing costs as interest rates increase on our variable rate credit facilities, as our various credit facilities mature or as we refinance any maturing fixed rate debt obligations, although these cost increases would be partially offset by increased income rates on portions of our cash deposits.
Overall, with generally strong cash-generative businesses and no significant long-term debt maturities before 2020, we believe we have, and will maintain, a solid liquidity position.
As previously reported in 2018, following receipt of information regarding potential improper payments being made by third party sales representatives of our Refining Solutions business, within our Catalysts segment, we promptly retained outside counsel and forensic accountants to investigate potential violations of the Company’s Code of Conduct, the Foreign Corrupt Practices Act and other potentially applicable laws. Based on this internal investigation, we have voluntarily self-reported potential issues relating to the use of third party sales representatives in our Refining Solutions business, within our Catalysts segment, to the U.S. Department of Justice (“DOJ”), the SEC, and the Dutch Public Prosecutor (“DPP”), and are cooperating with the DOJ, the SEC, and DPP in their review of these matters. In connection with our internal investigation, we have implemented, and are continuing to implement, appropriate remedial measures.
At this time, we are unable to predict the duration, scope, result or related costs associated with any investigations by the DOJ, the SEC, or DPP. We are unable to predict what, if any, action may be taken by the DOJ, the SEC, or DPP, or what penalties or remedial actions they may seek to impose. Any determination that our operations or activities are not in compliance with existing laws or regulations could result in the imposition of fines, penalties, disgorgement, equitable relief or other losses. We do not believe, however, that any fines, penalties, disgorgement, equitable relief or other losses would have a material adverse effect on our financial condition or liquidity.
We had cash and cash equivalents totaling $317.8 million at September 30, 2019, of which $296.0 million is held by our foreign subsidiaries. This cash represents an important source of our liquidity and is invested in bank accounts or money market investments with no limitations on access. The cash held by our foreign subsidiaries is intended for use outside of the U.S. We anticipate that any needs for liquidity within the U.S. in excess of our cash held in the U.S. can be readily satisfied with borrowings under our existing U.S. credit facilities or our commercial paper program.
41

Table of Contents
Summary of Critical Accounting Policies and Estimates
Effective January 1, 2019, we adopted ASU 2016-12, “Leases.” As a result, we have updated our lease accounting policy, see Item 1 Financial Statements – Note 1, “Basis of Presentation,” for additional details. There have been no other significant changes in our critical accounting policies and estimates from the information we provided in our Annual Report on Form 10-K for the year ended December 31, 2018.
Recent Accounting Pronouncements
For a description of recent accounting pronouncements, see Item 1 Financial Statements – Note 17, “Recently Issued Accounting Pronouncements.”

Item 3. | Quantitative and Qualitative Disclosures About Market Risk.

There have been no significant changes in our interest rate risk, foreign currency exchange rate exposure, marketable securities price risk or raw material price risk from the information we provided in our Annual Report on Form 10-K for the year ended December 31, 2018.
We had variable interest rate borrowings of $546.7 million outstanding at September 30, 2019, bearing a weighted average interest rate of 2.25% and representing approximately 28% of our total outstanding debt. A hypothetical 10% change (approximately 23 basis points) in the interest rate applicable to these borrowings would change our annualized interest expense by approximately $1.2 million as of September 30, 2019. We may enter into interest rate swaps, collars or similar instruments with the objective of reducing interest rate volatility relating to our borrowing costs.
Our financial instruments which are subject to foreign currency exchange risk consist of foreign currency forward contracts with an aggregate notional value of $1.11 billion and with a fair value representing a net liability position of $1.7 million at September 30, 2019. Fluctuations in the value of these contracts are generally offset by the value of the underlying exposures being hedged. We conducted a sensitivity analysis on the fair value of our foreign currency hedge portfolio assuming an instantaneous 10% change in select foreign currency exchange rates from their levels as of September 30, 2019, with all other variables held constant. A 10% appreciation of the U.S. Dollar against foreign currencies that we hedge would result in a decrease of approximately $34.0 million in the fair value of our foreign currency forward contracts. A 10% depreciation of the U.S. Dollar against these foreign currencies would result in an increase of approximately $24.9 million in the fair value of our foreign currency forward contracts. The sensitivity of the fair value of our foreign currency hedge portfolio represents changes in fair values estimated based on market conditions as of September 30, 2019, without reflecting the effects of underlying anticipated transactions. When those anticipated transactions are realized, actual effects of changing foreign currency exchange rates could have a material impact on our earnings and cash flows in future periods.

Item 4. | Controls and Procedures.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
The Company has begun the implementation of a new enterprise resource platform system to increase the overall efficiency and productivity of our processes, which will result in changes in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) throughout the implementation process in 2019. There have been no other changes during the third quarter ended September 30, 2019 to our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
42

Table of Contents
PART II. OTHER INFORMATION

Item 1. | Legal Proceedings.

We are involved from time to time in legal proceedings of types regarded as common in our business, including administrative or judicial proceedings seeking remediation under environmental laws, such as Superfund, products liability, breach of contract liability and premises liability litigation. Where appropriate, we may establish financial reserves for such proceedings. We also maintain insurance to mitigate certain of such risks. Additional information with respect to this Item 1 is contained in Note 9 to the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Item 1A. | Risk Factors.

While we attempt to identify, manage and mitigate risks and uncertainties associated with our business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. The risk factors set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018 describes some of the risks and uncertainties associated with our business. These risks and uncertainties have the potential to materially affect our results of operations and our financial condition. We do not believe that there have been any material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018.

Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds.

NONE

Item 6. | Exhibits.

(a) Exhibits

10.1 |  |  | Syndicated Facility Agreement, dated as of August 14, 2019, among Albemarle Corporation, Albemarle Finance Company B.V., Albemarle New Holding GmbH, Albemarle Wodgina Pty Ltd, the Lenders Party Hereto and JPMorgan Chase Bank, N.A., as Administrative Agent
10.2 |  |  | First Amendment to Credit Agreement, dated as of August 14, 2019, among Albemarle Corporation, Albemarle Europe SRL, the Lenders party hereto, and Bank of America, N.A., as Administrative Agent for the Lenders
10.3 |  |  | MARBL Joint Venture Agreement, dated August 1, 2019, among Wodgina Lithium Pty Ltd, Albemarle Wodgina Pty Ltd, and MARBLE Lithium Operations Pty Ltd
10.4 |  |  | Amendment Deed to Asset Sale and Share Subscription Agreement and MRL Kemerton ASA, dated August 1, 2019, among Wodgina Lithium Pty Ltd, Albemarle Wodgina Pty Ltd, Mineral Resources Limited, Albemarle Corporation, and Albemarle Lithium Pty Ltd
31.1 |  |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a).
31.2 |  |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a).
32.1 |  |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350.
32.2 |  |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350.
101 |  |  | Interactive Data File (Quarterly Report on Form 10-Q, for the quarterly period ended September 30, 2019, furnished in XBRL (eXtensible Business Reporting Language)).

Attached as Exhibit 101 to this report are the following documents formatted in XBRL: (i) the Consolidated Statements of Income for the three and nine months ended September 30, 2019 and 2018, (ii) the Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2019 and 2018, (iii) the Condensed Consolidated Balance Sheets at September 30, 2019 and December 31, 2018, (iv) the Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2019 and 2018, (v) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 and (vi) the Notes to the Condensed Consolidated Financial Statements.
43

Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  |  | ALBEMARLE CORPORATION
|  |  | (Registrant)
Date: | November 6, 2019 |  | By: |  | /S/ S COTT A. T OZIER
|  |  |  |  | Scott A. Tozier
|  |  |  |  | Executive Vice President and Chief Financial Officer
|  |  |  |  | (principal financial officer)

44