KRATON PERFORMANCE POLYMERS, INC. ANNOUNCES FOURTH QUARTER AND FULL YEAR 2012 RESULTS

KRATON PERFORMANCE POLYMERS, INC. ANNOUNCES FOURTH QUARTER AND FULL YEAR 2012
                                   RESULTS

ANNOUNCES EXECUTION OF DEFINITIVE AGREEMENTS PROVIDING FOR A 50/50 JOINT
VENTURE WITH FORMOSA PETROCHEMICAL CORPORATION

PR Newswire

HOUSTON, Feb. 27, 2013

HOUSTON, Feb. 27, 2013 /PRNewswire/ --Kraton Performance Polymers, Inc.
(NYSE: KRA), a leading global producer of styrenic block copolymers, announces
financial results for the quarter and year ended December 31, 2012. In
addition, the company announces the execution of definitive agreements
providing for the formation of a 50/50 joint venture with Formosa
Petrochemical Corporation to build, own and operate a 30 kiloton HSBC plant in
Mailiao, Taiwan.

2012 FOURTH QUARTER AND FULL YEAR REVIEW

  oFourth quarter 2012 sales volume was 67.2 kilotons, up 8.6% compared to
    61.9 kilotons in the fourth quarter 2011. Full year 2012 sales volume was
    313.4 kilotons, up 3.4% from 303.0 kilotons in 2011.
  oFourth quarter 2012 sales revenue was $296.4 million, down $7.8 million
    compared to $304.2 million in the fourth quarter 2011. Full year 2012
    sales revenue was $1,423.1 million, down $14.4 million compared to
    $1,437.5 million in 2011.
  oAdjusted EBITDA was $12.1 million in the fourth quarter 2012 compared to
    $(7.0) million in the fourth quarter 2011.Adjusted EBITDA at ECRC was
    $22.4 million in the fourth quarter 2012, compared to $29.7 million in the
    fourth quarter 2011. Full year 2012 Adjusted EBITDA was $113.3 million
    compared to $194.3 million in 2011. Full year 2012 Adjusted EBITDA at
    ECRC was $143.8 million, compared to $128.0 million in 2011.
  oFourth quarter 2012 net loss was $29.5 million or $0.91 per diluted share,
    compared to net loss of $21.0 million or $0.66 per diluted share in the
    fourth quarter 2011. In the fourth quarters of 2012 and 2011, the company
    increased the valuation allowance associated with deferred tax assets,
    which increased the net loss in 2012 and 2011 by $21.2 million or $0.66
    per diluted share and $1.6 million or $0.05 per diluted share,
    respectively. The fourth quarter 2012 net loss also includes certain
    non-recurring and other items of $1.4 million, net of tax, which increased
    net loss by $0.04 per diluted share. Full year 2012 net loss was $16.2
    million or $0.50 per diluted share, compared to net income of $90.9
    million or $2.81 per diluted share in 2011. The impact of the change in
    our valuation allowance associated with deferred tax assets increased our
    2012 net loss by $30.7 million or $0.95 per diluted share and increased
    our 2011 net income by $17.3 million or $0.54 per diluted share. The 2012
    net loss includes certain non-recurring and other items which increased
    the net loss by $9.5 million or $0.30 per diluted share and 2011 net
    income includes the impact of charges of $9.8 million or $0.31 per diluted
    share.
  oCash provided by operating activities was $44.1 million in the fourth
    quarter 2012, compared to cash provided by operating activities of $61.2
    million in the fourth quarter 2011. For the full year 2012, cash from
    operating activities was $146.3 million, compared to $64.8 million in
    2011.

"Despite disruptive raw material price volatility, our full-year sales volume
was 313 kilotons, up 3% from 2011 levels, reflecting strong growth in Asia
Pacific and Europe," said Kevin M. Fogarty, Kraton's President and Chief
Executive Officer. "We had a number of notable successes in 2012 as we
advanced many of our innovation platforms including NEXAR, which was
commercialized during the year, and we continued to see encouraging volume
growth in recently introduced innovations such as polymers for use in
highly-modified asphalt and in oilfield applications. We closed the year with
a Vitality Index of 14%,"said Fogarty. "As for our plans to expand HSBC
capacity,we are extremely pleased to announce that following Formosa's
success in resolving conditions associated with environmental permitting we
have executed agreements providing for the formation of our joint venture with
Formosa, a significant milestone that formally sets in motion our plans to
fund the joint venture, finalize the engineering, and begin construction of a
state-of-the-art HSBC plant in Mailiao, Taiwan,"said Fogarty. "We have long
believed that a joint venture with Formosa provides the most compelling option
for Kraton's Asia HSBC capacity expansion. In addition to an attractive
capital structure, thelocation at Formosa's site in Mailiao will provide the
joint venture with a centralized location to serve Kraton's global customers,
includingimportant growth markets throughout the Asia Pacific region. As
well, the joint venture will have access tocompetitively priced on-site
feedstocks, site services, andFormosa's vast resources, including project
execution expertise, that should significantly reduce project execution and
operational risk."

                       Three Months Ended          Years Ended December 31,
                       December 31,
(US $ in thousands,
except per share       2012          2011          2012          2011
amounts)
Revenues               $ 296,418    $ 304,230    $ 1,423,122   $  1,437,479
Adjusted EBITDA^(1)    $  12,124   $  (6,953)  $  113,309  $  
                                                                 194,327
Adjusted EBITDA at     $  22,359   $  29,658   $  143,842  $  
ECRC ^(1)                                                        127,995
Net income (loss) ^(2) $  (29,452)  $  (21,022)  $            $   
                                                   (16,191)     90,925
Net income (loss) per  $          $          $          $     
diluted share^(2)      (0.91)        (0.66)        (0.50)       2.81
Net cash provided by   $  44,145   $  61,225   $  146,333   $   
operating activities                                             64,775



(1) A reconciliation of Net Income (loss) to Adjusted EBITDA and Adjusted
EBITDA at ECRC is included in the accompanying financial tables.

(2)Net income (loss) includes the following (charges)/benefits (US $ in
thousands, except per share amounts):

                          Three months ended         Three months ended
                          December31, 2012          December31, 2011
                          After Tax    EPS           After Tax      EPS
Retirement plan           $  (1,100) $   (0.03) $      0 $    
settlement                                                           0
Restructuring and related (297)        (0.01)        (35)           0
charges
Change in valuation       (21,224)     (0.66)        (1,645)        (0.05)
allowance
 Total       $ (22,621)   $ (0.70)      $ (1,680)      $ (0.05)



                                  Year ended          Year ended
                                  December 31, 2012   December 31, 2011
                                  After Tax  EPS      After Tax EPS
Settlement gain                   $ 6,909    $ 0.22   $ 0       $ 0
Property tax dispute              (6,211)    (0.20)   0         0
Storm related charges             (2,481)    (0.08)   0         0
Retirement plan settlement        (1,100)    (0.03)   0         0
Restructuring and related charges (1,215)    (0.04)   (1,768)   ( 0 .06)
Impairment of long-lived assets   (5,434)    (0.17)   0         0
Loss on extinguishment of debt    0          0        (8,057)   (0.25)
Change in valuation allowance     (30,709)   (0.95)   17,303    0.54
 Total            $ (40,241) $ (1.25) $ 7,478   $ 0.23



4Q 2012 VERSUS 4Q 2011 RESULTS
Sales revenue was $296.4 million in the fourth quarter 2012, down $7.8 million
compared to $304.2 million in the fourth quarter 2011. Sales volume in the
fourth quarter 2012 was 67.2 kilotons compared to 61.9 kilotons in the fourth
quarter 2011. The 8.6% increase in sales volume resulted in revenue growth of
$26.6 million, which was partially offset by a $20.6 million reduction in
average selling prices, primarily due to lower raw material costs. The
balance of the revenue decline was primarily due to changes in foreign
currency exchange rates.

Adjusted EBITDA in the fourth quarter 2012 was $12.1 million, or 4.1% of
revenue, compared to $(7.0) million, or (2.3)% of revenue in the fourth
quarter 2011. Adjusted EBITDA at ECRC was $22.4 million, or 7.5% of revenue
in the fourth quarter 2012, compared to $29.7 million, or 9.7% of revenue in
the fourth quarter 2011.

Our effective tax rate was a 103.0% expense and a 31.2% benefit for the three
months ended December 31, 2012 and 2011, respectively. Excluding the change
in our valuation allowance, our effective tax rate would have been a 43.3% and
a 36.6% benefit for the three months ended December 31, 2012 and 2011,
respectively.

Fourth quarter 2012 net loss was $29.5 million or $0.91 per diluted share,
compared to the fourth quarter 2011 net loss of $21.0 million or $0.66 per
diluted share. In the fourth quarters of 2012 and 2011, the company increased
the valuation allowance associated with deferred tax assets, which increased
the net loss in 2012 and 2011 by $21.2 million or $0.66 per diluted share and
$1.6 million or $0.05 per diluted share, respectively. The fourth quarter
2012 net loss also includes charges of $1.4 million, net of tax, which
increased net loss by $0.04 per diluted share.

End Use Market Information
Cariflex™
Sales revenue increased $3.6 million or 14.1% to $29.3 million for the three
months ended December 31, 2012 from $25.6 million for the three months ended
December 31, 2011. Excluding the $1.3 million negative impact from changes in
foreign currency exchange rates, Cariflex revenue would have improved $4.9
million or 19.2%.Cariflex sales volume increased 13% compared to the fourth
quarter 2011, driven by higher sales of IR latex.

Advanced Materials
Sales revenue decreased $2.1 million or 2.5% to $81.3 million for the three
months ended December 31, 2012 from $83.4 million for the three months ended
December 31, 2011. Changes in foreign currency exchange rates represented $1.5
million of the decline in sales revenue. The balance of the decline was due
to lower average selling prices which were partially offset by increased sales
of more differentiated products, including innovation grades for PVC
alternatives in medical and in wire and cable applications.

Adhesives, Sealants and Coatings
Sales revenue decreased $3.3 million or 2.9% to $109.5 million for the three
months ended December 31, 2012 from $112.8 million for the three months ended
December 31, 2011. Excluding the negative impact of the $3.5 million change
in foreign currency exchange rates, revenue would have been essentially flat
year-on-year, as higher sales volume offset the impact of lower average
selling prices compared to the fourth quarter 2011. Innovation volumes
increased year-on-year, led by higher sales into printing plate and oilfield
applications.

Paving and Roofing
Sales revenue decreased $1.5 million or 1.9% to $76.3 million for the three
months ended December 31, 2012 from $77.8 million for the three months ended
December 31, 2011. Excluding a $3.1 million negative impact from changes in
foreign currency exchange rates, revenue increased $1.6 million, as higher
sales volume more than offset lower average selling prices compared to the
fourth quarter 2011. Paving volumes increased worldwide, led by North America
and by Europe. Roofing volume was essentially flat compared to the fourth
quarter 2011.

FY 2012 VERSUS FY 2011 RESULTS
Sales revenue in 2012 was $1,423.1 million, a decrease of approximately $14.4
million or 1.0% compared to 2011. Excluding the impact of changes in foreign
currency exchange rates aggregating $66.7 million, revenue increased $52.3
million or 3.6% of which $42.2 million resulted from a 3.4% increase in sales
volume and $12.6 million resulted from increased average selling prices.
Sales volume in 2012 was 313.4 kilotons compared to 303.0 kilotons in 2011.

Adjusted EBITDA in 2012 was $113.3 million, or 8.0% of revenue, compared to
$194.3 million, or 13.5% of revenue in 2011. Adjusted EBITDA at ECRC was
$143.8 million or 10.1% of revenue in 2012, compared to $128.0 million, or
8.9% of revenue in 2011.

Our effective tax rate was a 619.8% and 0.6% expense for the years ended
December 31, 2012 and 2011, respectively. Excluding the change in our
valuation allowance, our effective tax rate would have been a 366.1% benefit,
primarily due to the mix of pre-tax income earned in foreign jurisdictions,
and a 19.5% expense for the years ended December 31, 2012 and 2011,
respectively.

Net loss was $16.2 million or $0.50 per diluted share for the year ended
December 31, 2012, compared to net income of $90.9 million or $2.81 per
diluted share for the year ended December 31, 2011. For the year ended
December 31, 2012, we increased our valuation allowance associated with
deferred tax assets, which increased the net loss by $30.7 million or $0.95
per diluted share. For the year ended December 31, 2011, we decreased our
valuation allowance associated with deferred tax assets, which increased net
income by $17.3 million or $0.54 per diluted share. In addition, 2012 and 2011
full year results included net charges on an after tax basis of $9.5 million
and $9.8 million, which increased net loss by $0.30 and reduced net income by
$0.31 per diluted share, respectively.

CASH FLOW
During the fourth quarter of 2012, net cash provided by operating activities
was $44.1 million compared to net cash provided by operating activities of
$61.2 million in the fourth quarter of 2011. Net cash provided by operating
activities was $146.3 million and $64.8 million for the years ended December
31, 2012 and 2011, respectively. Net capital expenditures in the fourth
quarter 2012 were $25.4 million versus $14.8 million in the fourth quarter
2011. Net capital expenditures were $69.6 million and $64.4 million for the
years ended December 31, 2012 and 2011, respectively.

RECENT DEVELOPMENTS
Formation of Joint Venture to Expand Hydrogenated Styrenic Block Copolymer
("HSBC") Capacity in Asia - On February 27, 2013, we executed definitive
agreements providing for a 50/50 joint venture with Formosa Petrochemical
Corporation ("FPCC") to build, own and operate a 30 kiloton HSBC plant at
FPCC's petrochemical site in Mailiao, Taiwan. Each of Kraton and FPCC will
fund 50% of the capital needs of the joint venture that are not satisfied
through debt financing. Kraton has exclusive rights to purchase all
production from the plant, which it intends to market world-wide, through its
global sales and distribution network. Additionally, Kraton will be obligated
to purchase a minimum volume each year, with the minimum obligation increasing
over the first three years the plant is operational. The joint venture will
be a Taiwan entity, with each of Kraton and FPCC having equal representation
on the board. 

As we previously disclosed, progress on the HSBC joint venture project had
been interrupted, initially because of delays in FPCC's obtaining
environmental permit approval from the Taiwanese Environmental Protection
Agency, and subsequently because when the permit was finally issued in July
2012, it contained conditions FPCC considered to be too restrictive on its
overall operations in Mailiao. Due to the uncertainty with respect to FPCC's
resolving these conditions, in early October 2012, we opted not to extend our
framework agreement with FPCC that had governed the proposed formation of the
joint venture, which agreement expired in accordance with its terms on
September30, 2012. The pre-tax impairment charge of $3.4 million for the
group of long-lived assets related to the HSBC facility recorded in the third
quarter of 2012 will not be affected by the execution of definitive
agreements.

Following the expiration of the framework agreement with FPCC, we began
in-depth evaluation of options for a stand-alone HSBC expansion project at
other locations in the Asia Pacific region. However, during the fourth quarter
of 2012, FPCC informed us that it was successful in its efforts to resolve the
issue with respect to the conditions attached to the environmental permit.
Following this important development, Kraton and FPCC renewed discussions
regarding the proposed joint venture, ultimately resulting in the successful
execution of definitive documentation to form the venture.

Based upon current estimates of the construction timeline and subject to
timely receipt of all required permits, we anticipate that mechanical
completion of the plant could occur as early as mid-2015. At this time, after
completing our initial engineering estimate, we anticipate the total project
construction cost will be at least $200.0 million. We and FPCC intend to
pursue opportunities to obtain debt financing for project costs at the joint
venture level. Based on our current assumptions with respect to final project
cost, timing and the extent to which the project can be funded through
third-party debt financing, we currently estimate our share of the funding for
the joint venture will be approximately $50.0 million of which approximately
$40.0 million is currently estimated to be funded in 2013. We currently
anticipate funding our 2013 contributions with available liquidity.

Raw Material Volatility - We currently anticipate that our gross profit will
reflect a negative spread between FIFO and ECRC of less than $3.0 million in
the first quarter of 2013 and our current view is that average raw material
costs may increase slightly in the second quarter 2013, largely driven by
increases in pricing for butadiene. This expectation is based on numerous
complex and interrelated assumptions with respect to monomer costs, and ending
inventory levels in the first quarter and the actual results may be
significantly different based on first quarter results.

USE OF NON-GAAP FINANCIAL MEASURES
This earnings release includes the use of both GAAP and non-GAAP financial
measures. The non-GAAP financial measures are EBITDA, Adjusted EBITDA,
Adjusted EBITDA at ECRC and Gross Profit at ECRC. A table included in this
earnings release reconciles each of these non-GAAP financial measures with the
most directly comparable GAAP financial measure.

We consider these non-GAAP financial measures important supplemental measures
of our performance and believe they are frequently used by investors,
securities analysts and other interested parties in the evaluation of our
performance and/or that of other companies in our industry, including
period-to-period comparisons. Further, management uses these measures to
evaluate operating performance, and; our executive compensation plan bases
incentive compensation payments on our Adjusted EBITDA and Adjusted EBITDA at
ECRC performance, along with other factors. These non-GAAP financial measures
have limitations as analytical tools and in some cases can vary substantially
from other measures of our performance. You should not consider them in
isolation, or as a substitute for analysis of our results under GAAP in the
United States. For EBIDTA, these limitations include: EBITDA does not
reflect our cash expenditures, or future requirements for capital expenditures
or contractual commitments; EBITDA does not reflect changes in, or cash
requirements for, our working capital needs; EBITDA does not reflect the
significant interest expense, or the cash requirements necessary to service
interest or principal payments, on our debt; although depreciation and
amortization are non-cash charges, the assets being depreciated and amortized
will often have to be replaced in the future, and EBITDA does not reflect any
cash requirements for such replacements; EBITDA calculations under the terms
of our debt agreements may vary from EBITDA presented herein, and our
presentation of EBITDA herein is not for purposes of assessing compliance or
non-compliance with financial covenants under our debt agreements; and other
companies in our industry may calculate EBITDA differently from how we do,
limiting its usefulness as a comparative measure. As an analytical tool,
Adjusted EBITDA is subject to all the limitations applicable to EBITDA. In
addition, we prepare Adjusted EBITDA by adjusting EBITDA to eliminate the
impact of a number of items we do not consider indicative of our on-going
performance, but you should be aware that in the future we may incur expenses
similar to the adjustments in this presentation. Our presentation of Adjusted
EBITDA should not be construed as an inference that our future results will be
unaffected by unusual or non-recurring items. As an analytical tool, Adjusted
EBITDA at ECRC is subject to all the limitations applicable to EBITDA, as well
as the following limitations: due to volatility in raw material prices,
Adjusted EBITDA at ECRC may, and often does, vary substantially from EBITDA
and other performance measures, including net income calculated in accordance
with GAAP; and Adjusted EBITDA at ECRC may, and often will, vary
significantly from EBITDA calculations under the terms of our debt agreements
and should not be used for assessing compliance or non-compliance with
financial covenants under our credit agreement. Because of these and other
limitations, EBITDA, Adjusted EBITDA and ECRC Adjusted EBITDA should not be
considered as a measure of discretionary cash available to us to invest in the
growth of our business. Finally, as a measure of our performance, Gross
Profit at ECRC is limited because it often varies substantially from gross
profit calculated in accordance with GAAP due to volatility in raw material
prices.

CONFERENCE CALL AND WEBCAST INFORMATION
Kraton has scheduled a conference call on Thursday, February 28, 2013 at 9:00
a.m. (Eastern Time) to discuss fourth quarter 2012 financial results. Kraton
invites you to listen to the conference call, which will be broadcast live
over the internet at www.kraton.com, by selecting the "Investor Relations"
link at the top of the home page and then selecting "Events" from the Investor
Relations menu on the Investor Relations page.

You may also listen to the conference call by telephone by contacting the
conference call operator 5 to 10 minutes prior to the scheduled start time and
asking for the "Kraton Conference Call – Passcode: Earnings Call."
U.S./Canada dial-in #: 888-989-5214. International dial-in #: 517-308-9285.

For those unable to listen to the live call, a replay will be available
beginning at approximately 11:00 a.m. (Eastern Time) on February 28, 2013
through 11:59 p.m. Eastern Time on April 23, 2013. To hear a replay of the
call over the Internet, access Kraton's Website at www.kraton.com by selecting
the "Investor Relations" link at the top of the home page and then selecting
"Events" from the Investor Relations menu on the Investor Relations page. To
hear a telephonic replay of the call, dial 866-430-8798 and International
callers dial 203-369-0944.

ABOUT KRATON
Kraton Performance Polymers, Inc., through its operating subsidiary Kraton
Polymers LLC and its subsidiaries (collectively, "Kraton"), is a leading
global producer of engineered polymers and one of the world's largest
producers of styrenic block copolymers (SBCs), a family of products whose
chemistry was pioneered by Kraton almost 50 years ago. Kraton's polymers are
used in a wide range of applications, including adhesives, coatings, consumer
and personal care products, sealants and lubricants, and medical, packaging,
automotive, paving, roofing and footwear products. The company offers products
to more than 800 customers in over 60 countries worldwide. We manufacture
products at five plants globally, including our flagship plant in Belpre,
Ohio, which we believe is the most diversified SBC plant in the world, as well
as plants in Germany, France, Brazil and Japan. The plant in Japan is operated
by an unconsolidated manufacturing joint venture. For more information on the
company, please visit www.kraton.com.

Kraton, the Kraton logo and design, and the "Giving Innovators their Edge"
tagline are all trademarks of Kraton Polymers LLC.

FORWARD LOOKING STATEMENTS
This press release includes forward-looking statements that reflect our plans,
beliefs, expectations and current views with respect to, among other things,
future events and financial performance. Forward-looking statements are often
characterized by the use of words such as "outlook," "believes," "estimates,"
"expects," "projects," "may," "intends," "plans" or "anticipates," or by
discussions of strategy, plans or intentions, including statements regarding
the anticipated costs, capital structure of, and prospects for our joint
venture with FPCC,projected gross profit impact and FIFO to ECRC spreads and
expectations regarding monomer pricing.

All forward-looking statements in this press release are made based on
management's current expectations and estimates, which involve known and
unknown risks, uncertainties and other important factors that could cause
actual results to differ materially from those expressed in forward-looking
statements. These risks and uncertainties are more fully described in in our
latest Annual Report on Form 10-K, as subsequently amended on March 8, 2012,
including but not limited to "Part I, Item 1A. Risk Factors" and "Part I, Item
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations" therein, and in our other filings with the Securities and Exchange
Commission, and include, but are not limited to, risks related to: conditions
in the global economy and capital markets; declines in raw material costs; our
reliance on LyondellBasell Industries for the provision of significant
operating and other services; the failure of our raw materials suppliers to
perform their obligations under long-term supply agreements, or our inability
to replace or renew these agreements when they expire; limitations in the
availability of raw materials we need to produce our products in the amounts
or at the prices necessary for us to effectively and profitably operate our
business; competition in our end-use markets, from other producers of SBCs and
from producers of products that can be substituted for our products; our
ability to produce and commercialize technological innovations; our ability to
protect our intellectual property, on which our business is substantially
dependent; the possibility that our products infringe on the intellectual
property rights of others; significant fluctuation in raw material costs may
result in volatility in our quarterly results; seasonality in our business,
particularly for Paving and Roofing end uses; our substantial indebtedness,
which could adversely affect our financial condition and prevent us from
fulfilling our obligations under the senior secured credit agreement and the
senior notes; financial and operating constraints related to our
indebtedness; the inherently hazardous nature of chemical manufacturing;
product liability claims and other lawsuits arising from environmental damage,
personal injuries or other damage associated with chemical manufacturing;
political, economic and local business risks in the various countries in which
we operate; health, safety and environmental laws, including laws that govern
our employees' exposure to chemicals deemed harmful to humans; regulation of
our company or our customers, which could affect the demand for our products
or result in increased compliance costs; customs, international trade, export
control, antitrust, zoning and occupancy and labor and employment laws that
could require us to modify our current business practices and incur increased
costs; fluctuations in currency exchange rates; our relationship with our
employees; loss of key personnel or our inability to attract and retain new
qualified personnel; the fact that we typically do not enter into long-term
contracts with our customers; a decrease in the fair value of our pension
assets, which could require us to materially increase future funding of the
pension plan; anticipated benefits of or performance of our products; beliefs
regarding opportunities for new, high-margin applications and other
innovations; adequacy of cash flows to fund our working capital requirements;
our investment in the joint venture with FPCC; scheduled debt payments,
interest payments, capital expenditures, benefit plan contributions, and
income tax obligations; our anticipated 2013 capital expenditures, including
the amount of expenditures related to the semi-works facility, compliance with
the MACT rule, health, safety and environmental and infrastructure and
maintenance projects, projects to optimize the production capabilities of our
manufacturing assets and to support our innovation platform; our ability to
meet conditions required to ensure full access to our senior secured credit
facility; expectations regarding availability under our credit facility; our
plan to prepay certain outstanding indebtedness under our term loans in 2013;
expectations regarding our counterparties' ability to perform, including with
respect to trade receivables; anticipated aggregate and fiscal year 2013 cost
estimates for the planned Taiwan manufacturing facility, the portion of such
costs we expect to pay, the manner in which we expect to fund such costs, and
when we currently expect the facility to become operational; estimates
regarding the tax expense of repatriating certain cash and short-term
investments related to foreign operations; expectations regarding Nexar™; our
ability to realize certain deferred tax assets and our beliefs with respect to
tax positions; our plans and expectations regarding our planned Asia expansion
project; estimates related to the useful lives of certain assets for tax
purposes; our anticipated dividend policy; expectations regarding our pension
contributions for fiscal year 2013; estimates or expectations related to
monomer costs, ending inventory levels and related estimated charges; the
outcome and financial impact of legal proceedings; expectations regarding the
spread between FIFO and ECRC in future periods; and projections regarding
environmental costs and capital expenditures and related operational savings.
Delaware law and some provisions of our organizational documents make a
takeover of our company more difficult; our expectation that we will not pay
dividends for the foreseeable future; our status as a holding company
dependent on dividends from our subsidiaries; other risks, factors and
uncertainties described in this press release and our other reports and
documents; and other factors of which we are currently unaware or deem
immaterial. Readers are cautioned not to place undue reliance on
forward-looking statements. Forward-looking statements speak only as of the
date they are made, and we assume no obligation to update such information in
light of new information or future events. Further information concerning
issues that could materially affect financial performance related to
forward-looking statements can be found in Kraton's periodic filings with the
Securities and Exchange Commission.

For Further Information:
Investors: H. Gene Shiels 281-504-4886

(Logo: http://photos.prnewswire.com/prnh/20100728/DA42514LOGO)





KRATON PERFORMANCE POLYMERS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


                               Three months ended  Years ended
                               December31,        December 31,
                               2012      2011      2012          2011
Sales revenue                  $       $       $  1,423,122 $  1,437,479
                               296,418  304,230
Cost of goods sold             256,728   284,744   1,191,680     1,121,293
Gross profit                   39,690    19,486    231,442       316,186
Operating expenses:
Research and development       8,054     7,725     31,011        27,996
Selling, general and           22,332    20,685    98,555        101,606
administrative
Depreciation and amortization  16,711    15,816    64,554        62,735
Impairment of long-lived       0         0         5,434         0
assets
Total operating expenses       47,097    44,226    199,554       192,337
Loss on extinguishment of debt 0         0         0             (2,985)
Earnings of unconsolidated     97        673       530           529
joint venture
Interest expense, net          7,197     6,500     29,303        29,884
Income (loss) before income    (14,507)  (30,567)  3,115         91,509
taxes
Income tax expense (benefit)   14,945    (9,545)   19,306        584
Net income (loss)              $       $       $           $   
                               (29,452)  (21,022)  (16,191)      90,925
Earnings (loss) per common
share:
Basic                          $     $     $         $     
                               (0.91)    (0.66)    (0.50)        2.85
Diluted                        $     $     $         $     
                               (0.91)    (0.66)    (0.50)        2.81
Weighted average common shares
outstanding:
Basic                          31,975    31,892    31,939        31,786
Diluted                        31,975    31,892    31,939        32,209

KRATON PERFORMANCE POLYMERS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)


                                      December31,        December31,
                                      2012                2011
ASSETS
Current assets:
Cash and cash equivalents             $     223,166  $      88,579
Receivables, net of allowances of     124,635             142,696
$401 and $549
Inventories of products               340,323             394,796
Inventories of materials and supplies 10,331              9,996
Deferred income taxes                 7,869               2,140
Other current assets                  28,363              27,328
Total current assets                  734,687             665,535
Property, plant and equipment, less
accumulated depreciation of $311,779  381,205             372,973
and $281,442
Intangible assets, less accumulated   63,393              66,184
amortization of $68,531 and $58,530
Investment in unconsolidated joint    13,582              13,350
venture
Debt issuance costs                   10,846              11,106
Deferred income taxes                 79                  0
Other long-term assets                25,397              24,608
Total assets                          $    1,229,189   $    1,153,756
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt     $      15,074 $       7,500
Accounts payable-trade                99,167              88,026
Other payables and accruals           50,978              51,253
Deferred income taxes                 513                 0
Due to related party                  16,080              14,311
Total current liabilities             181,812             161,090
Long-term debt, net of current        432,943             385,000
portion
Deferred income taxes                 22,273              6,214
Other long-term liabilities           99,946              83,658
Total liabilities                     736,974             635,962
Stockholders' equity:
Preferred stock, $0.01 par value;
100,000 shares authorized; none       0                   0
issued
Common stock, $0.01 par value;
500,000 shares authorized; 32,277
shares issued and outstanding at      323                 321
December 31, 2012; 32,092 shares
issued and outstanding at December
31, 2011
Additional paid in capital            354,957             347,455
Retained earnings                     171,445             187,636
Accumulated other comprehensive loss  (34,510)            (17,618)
Total stockholders' equity            492,215             517,794
Total liabilities and stockholders'   $    1,229,189   $    1,153,756
equity





KRATON PERFORMANCE POLYMERS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


                                           Years ended

                                           December31,
                                           2012              2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                          $    (16,191)  $     90,925
 Adjustments to reconcile net
income (loss) to net cash provided by
operating activities:
Depreciation and amortization              64,554            62,735
Amortization of debt premium               (108)             0
Amortization of debt issuance costs        2,986             6,722
Loss on property, plant and equipment      415               90
Impairment of long-lived assets            5,434             0
Loss on extinguishment of debt             0                 2,985
Earnings from unconsolidated joint         (130)             (14)
venture, net of dividends received
Deferred income tax expense (benefit)      9,948             (10,461)
Share-based compensation                   6,571             5,459
Decrease (increase) in:
Accounts receivable                        16,646            (7,704 )
Inventories of products, materials and     53,615            (74,965)
supplies
Other assets                               (1,695)           7,841
Increase (decrease) in:
Accounts payable-trade                     8,680             3,418
Other payables and accruals                (6,481)           (12,025)
Other long-term liabilities                (1,534)           (4,120)
Due to related party                       3,623             (6,111)
Net cash provided by operating activities  146,333           64,775
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment  (65,006)          (60,311 )
Purchase of software                       (4,603 )          (4,129 )
Settlement of net investment hedge         (335)             0
Net cash used in investing activities      (69,944 )         (64,440)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt                         101,250           400,000
Repayments of debt                         (45,626)          (393,160 )
Proceeds from the exercise of stock        933               8,271
options
Proceeds from insurance note payable       0                 4,734
Repayment of insurance note payable        0                 (4,734 )
Debt issuance costs                        (3,156)           (15,231)
Net cash provided by (used in) financing   53,401            (120)
activities
Effect of exchange rate differences on     4,797             (4,386)
cash
Net increase (decrease) in cash and cash   134,587           (4,171)
equivalents
Cash and cash equivalents, beginning of    88,579            92,750
period
Cash and cash equivalents, end of period   $    223,166   $     88,579
Supplemental disclosures:
Cash paid during the period for income     $     14,241  $      6,817
taxes, net of refunds received
Cash paid during the period for interest,  $     24,402  $     22,829
net of capitalized interest
Capitalized interest                       $      2,648 $      2,259
Supplemental non-cash disclosures:
Non-cash capital accruals                  $      8,462 $      7,832







KRATON PERFORMANCE POLYMERS, INC.

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA, ADJUSTED EBITDA AND ADJUSTED
EBITDA AT ECRC

(In thousands)

(Unaudited)


We reconcile net income (loss) to EBITDA, Adjusted EBITDA and Adjusted EBITDA
at ECRC as follows:
                           Three months ended          Years ended
                           December 31,                December 31,
                           2012        2011            2012        2011
                           (in thousands)              (in thousands)
Net income (loss)          $        $   (21,022)  $        $    
                           (29,452)                    (16,191)    90,925
Add:
Interest expense, net      7,197       6,500           29,303      29,884
Income tax expense         14,945      (9,545)         19,306      584
(benefit)
Depreciation and           16,711      15,816          64,554      62,735
amortization expenses
EBITDA                     $       $    (8,251) $       $   
                           9,401                      96,972     184,128
Add (deduct):
Settlement gain (a)        0           0               (6,819)     0
Property tax dispute (b)   0           0               6,211       0
Storm related charges (c)  0           0               2,481       0
Retirement plan settlement 1,100       0               1,100       0
(d)
Restructuring and related  297         35              1,359       1,755
charges (e)
Non-cash compensation      1,326       1,263           6,571       5,459
expense
Impairment of long-lived   0           0               5,434       0
assets (f)
Loss on extinguishment of  0           0               0           2,985
debt (g)
Adjusted EBITDA    12,124      (6,953)         113,309     194,327
Add (deduct):
Spread between FIFO and    10,235      36,611          30,533      (66,332)
ECRC
Adjusted EBITDA at ECRC    $        $    29,658 $        $   
(h)                        22,359                     143,842    127,995

(a) Reflects the benefit of the LBI settlement, which is recorded in cost of
    goods sold.
    Reflects a charge associated with the resolution of the property tax
(b) dispute in France, of which $5,646 is recorded in cost of goods sold and
    $565 is recorded in selling, general and administrative expenses.
(c) Reflects the storm related charge at our Belpre, Ohio facility, which is
    recorded in cost of goods sold.
    Reflects the retirement plan settlement charge associated with a
(d) disbursement from a benefit plan upon the retirement of an employee which
    is recorded in selling, general and administrative expenses.
    Includes charges related to severance expenses, fees associated with the
(e) public offering of our senior notes, secondary public offering of our
    common stock, consulting fees, charges associated with the restructuring
    of our European organization and evaluating acquisition transactions.
    Reflects the impairment of long-lived assets, of which $3.4 million and
(f) $2.0 million were associated with the HSBC facility and other long-term
    assets, respectively.
(g) Reflects the loss on extinguishment of debt arising from the 2011
    refinancing.
    Adjusted EBITDA at estimated current replacement cost ("ECRC") is Adjusted
    EBITDA net of the impact of the spread between the FIFO basis of
    accounting and ECRC. Although we report our financial results using the
    FIFO basis of accounting, as part of our pricing strategy, we measure our
    business performance using the estimated current replacement cost of our
    inventory and cost of goods sold. In addition, volatility in the cost of
(h) raw materials affects our results of operations and the period-over-period
    comparability of our results of operations. Therefore, we provide the
    spread between FIFO and ECRC, and we present Adjusted EBITDA at ECRC as
    another supplemental measure of our performance. We believe this
    additional adjustment provides helpful information to investors,
    securities analysts and other interested parties in evaluating
    period-over-period comparisons of our performance.





KRATON PERFORMANCE POLYMERS, INC.

RECONCILIATION OF GROSS PROFIT TO GROSS PROFIT AT ECRC

(In thousands)

(Unaudited)


We reconcile Gross Profit to Gross Profit at ECRC as follows:
                    Three months ended           Years ended
                    December31,                 December 31,
                    2012           2011          2012           2011
                    (in thousands)               (in thousands)
Gross profit        $           $          $           $   
                    39,690        19,486       231,442       316,186
Add (deduct):
Spread between FIFO 10,235         36,611        30,533         (66,332)
and ECRC
Gross profit at     $           $          $           $   
ECRC (a)            49,925        56,097       261,975       249,854

(a) Gross Profit at ECRC is gross profit net of the impact of the spread
between the FIFO basis of accounting and ECRC. Although we report our
financial results using the FIFO basis of accounting, as part of our pricing
strategy, we measure our business performance using the estimated current
replacement cost of our inventory and cost of goods sold. In addition,
volatility in the cost of raw materials affects our results of operations and
the period-over-period comparability of our results of operations. Therefore,
we provide Gross Profit at ECRC as another supplemental measure of our
performance. We believe this adjustment provides helpful information to
investors, securities analysts and other interested parties in the evaluating
period-over-period comparisons of our performance.

SOURCE Kraton Performance Polymers, Inc.

Website: http://www.kraton.com
 
Press spacebar to pause and continue. Press esc to stop.