| OPERATING SEGMENT INFORMATION |
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17. OPERATING SEGMENT INFORMATION
ÌýÌýÌýÌýÌýÌýÌýÌýWe derive our revenues, earnings and cash flows from the manufacture and sale of a wide variety of differentiated and commodity chemical products. We have reported our operations through five segments: Polyurethanes, Performance Products, Advanced Materials, Textile Effects and Pigments and Additives. We have organized our business and derived our operating segments around differences in product lines.
ÌýÌýÌýÌýÌýÌýÌýÌýThe major products of each reportable operating segment are as follows:
ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý
|
Segment
|
Ìý
|
Products
|
|
Polyurethanes
|
Ìý
|
MDI, PO, polyols, PG, TPU, aniline and MTBE
|
|
Performance Products
|
Ìý
|
amines, surfactants, LAB, maleic anhydride, other performance chemicals, EG, olefins and technology licenses
|
|
Advanced Materials
|
Ìý
|
basic liquid and solid epoxy resins; specialty resin compounds; cross-linking, matting and curing agents; epoxy, acrylic and polyurethane-based formulations
|
|
Textile Effects
|
Ìý
|
textile chemicals, dyes and inks
|
|
Pigments and Additives
|
Ìý
|
titanium dioxide, functional additives, color pigments, timber treatment and water treatment chemicals
|
ÌýÌýÌýÌýÌýÌýÌýÌýSales between segments are generally recognized at external market prices and are eliminated in consolidation. Adjusted EBITDA is presented as a measure of the financial performance of our global business units and for reporting the results of our operating segments. The adjusted EBITDA of operating segments excludes items that principally apply to our Company as a whole. The revenues and adjusted EBITDA for each of our reportable operating segments are as follows (dollars in millions):
ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý
|
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|
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|
Three months
ended
JuneÌý30,
|
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|
Six months
ended
JuneÌý30,
|
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|
|
Ìý
|
Ìý
|
2016
|
Ìý
|
2015
|
Ìý
|
2016
|
Ìý
|
2015
|
Ìý
|
|
Revenues:
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
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|
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|
Ìý
|
Ìý
|
Ìý
|
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|
Ìý
|
Ìý
|
Ìý
|
|
Polyurethanes
|
Ìý
|
$
|
976
|
Ìý
|
$
|
995
|
Ìý
|
$
|
1,812
|
Ìý
|
$
|
1,885
|
Ìý
|
|
Performance Products
|
Ìý
|
Ìý
|
566
|
Ìý
|
Ìý
|
675
|
Ìý
|
Ìý
|
1,102
|
Ìý
|
Ìý
|
1,331
|
Ìý
|
|
Advanced Materials
|
Ìý
|
Ìý
|
261
|
Ìý
|
Ìý
|
282
|
Ìý
|
Ìý
|
527
|
Ìý
|
Ìý
|
572
|
Ìý
|
|
Textile Effects
|
Ìý
|
Ìý
|
198
|
Ìý
|
Ìý
|
216
|
Ìý
|
Ìý
|
383
|
Ìý
|
Ìý
|
422
|
Ìý
|
|
Pigments and Additives
|
Ìý
|
Ìý
|
576
|
Ìý
|
Ìý
|
592
|
Ìý
|
Ìý
|
1,116
|
Ìý
|
Ìý
|
1,164
|
Ìý
|
|
Corporate and eliminations
|
Ìý
|
Ìý
|
(33
|
)
|
Ìý
|
(20
|
)
|
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|
(41
|
)
|
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|
(45
|
)
|
|
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|
�
|
|
Total
|
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|
$
|
2,544
|
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|
$
|
2,740
|
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|
$
|
4,899
|
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|
$
|
5,329
|
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|
|
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�
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|
�
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|
Segment adjusted EBITDA(1):
|
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|
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|
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|
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|
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|
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|
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|
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|
|
ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation:
|
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|
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|
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|
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|
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|
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|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
Polyurethanes
|
Ìý
|
$
|
171
|
Ìý
|
$
|
159
|
Ìý
|
$
|
302
|
Ìý
|
$
|
264
|
Ìý
|
|
Performance Products
|
Ìý
|
Ìý
|
86
|
Ìý
|
Ìý
|
141
|
Ìý
|
Ìý
|
178
|
Ìý
|
Ìý
|
262
|
Ìý
|
|
Advanced Materials
|
Ìý
|
Ìý
|
58
|
Ìý
|
Ìý
|
58
|
Ìý
|
Ìý
|
118
|
Ìý
|
Ìý
|
116
|
Ìý
|
|
Textile Effects
|
Ìý
|
Ìý
|
24
|
Ìý
|
Ìý
|
23
|
Ìý
|
Ìý
|
42
|
Ìý
|
Ìý
|
40
|
Ìý
|
|
Pigments and Additives
|
Ìý
|
Ìý
|
31
|
Ìý
|
Ìý
|
35
|
Ìý
|
Ìý
|
46
|
Ìý
|
Ìý
|
56
|
Ìý
|
|
Corporate and other(2)
|
Ìý
|
Ìý
|
(45
|
)
|
Ìý
|
(31
|
)
|
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|
(87
|
)
|
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|
(68
|
)
|
|
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�
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�
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|
�
|
|
Total
|
Ìý
|
Ìý
|
325
|
Ìý
|
Ìý
|
385
|
Ìý
|
Ìý
|
599
|
Ìý
|
Ìý
|
670
|
Ìý
|
|
Reconciliation of adjusted EBITDA to net income:
|
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|
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|
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|
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|
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|
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|
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|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
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|
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|
|
Interest expense, net
|
Ìý
|
Ìý
|
(50
|
)
|
Ìý
|
(53
|
)
|
Ìý
|
(100
|
)
|
Ìý
|
(109
|
)
|
|
Income tax expense—continuing operations
|
Ìý
|
Ìý
|
(32
|
)
|
Ìý
|
(34
|
)
|
Ìý
|
(59
|
)
|
Ìý
|
(36
|
)
|
|
Income tax benefit (expense)—discontinued operations
|
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|
Ìý
|
�
|
Ìý
|
Ìý
|
(1
|
)
|
Ìý
|
1
|
Ìý
|
Ìý
|
(2
|
)
|
|
Depreciation and amortization
|
Ìý
|
Ìý
|
(109
|
)
|
Ìý
|
(99
|
)
|
Ìý
|
(209
|
)
|
Ìý
|
(194
|
)
|
|
Net income attributable to noncontrolling interests
|
Ìý
|
Ìý
|
7
|
Ìý
|
Ìý
|
10
|
Ìý
|
Ìý
|
13
|
Ìý
|
Ìý
|
20
|
Ìý
|
|
Other adjustments:
|
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|
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|
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|
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|
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|
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|
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|
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|
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|
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|
Ìý
|
Ìý
|
Ìý
|
|
Acquisition and integration expenses and purchase accounting adjustments
|
Ìý
|
Ìý
|
(4
|
)
|
Ìý
|
(12
|
)
|
Ìý
|
(13
|
)
|
Ìý
|
(21
|
)
|
|
EBITDA of discontinued operations
|
Ìý
|
Ìý
|
(1
|
)
|
Ìý
|
(1
|
)
|
Ìý
|
(3
|
)
|
Ìý
|
(2
|
)
|
|
Loss on disposition of business/assets
|
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|
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|
�
|
Ìý
|
Ìý
|
(1
|
)
|
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|
�
|
Ìý
|
Ìý
|
(1
|
)
|
|
Loss on early extinguishment of debt
|
Ìý
|
Ìý
|
(2
|
)
|
Ìý
|
(20
|
)
|
Ìý
|
(2
|
)
|
Ìý
|
(23
|
)
|
|
Certain legal settlements and related expenses
|
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|
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|
�
|
Ìý
|
Ìý
|
(1
|
)
|
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|
(1
|
)
|
Ìý
|
(2
|
)
|
|
Amortization of pension and postretirement actuarial lossesÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý
|
Ìý
|
Ìý
|
(17
|
)
|
Ìý
|
(19
|
)
|
Ìý
|
(33
|
)
|
Ìý
|
(37
|
)
|
|
Net plant incident remediation credits
|
Ìý
|
Ìý
|
7
|
Ìý
|
Ìý
|
�
|
Ìý
|
Ìý
|
6
|
Ìý
|
Ìý
|
�
|
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|
|
Restructuring, impairment and plant closing and transition costs
|
Ìý
|
Ìý
|
(30
|
)
|
Ìý
|
(115
|
)
|
Ìý
|
(43
|
)
|
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|
(209
|
)
|
|
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�
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|
�
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|
Net income
|
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|
$
|
94
|
Ìý
|
$
|
39
|
Ìý
|
$
|
156
|
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|
$
|
54
|
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|
|
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|
Ìý
|
Ìý
|
Three months
ended JuneÌý30,
|
Ìý
|
Six months
ended JuneÌý30,
|
Ìý
|
|
Ìý
|
Ìý
|
2016
|
Ìý
|
2015
|
Ìý
|
2016
|
Ìý
|
2015
|
Ìý
|
|
ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International:
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
Segment adjusted EBITDA(1):
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
Polyurethanes
|
Ìý
|
$
|
171
|
Ìý
|
$
|
159
|
Ìý
|
$
|
302
|
Ìý
|
$
|
264
|
Ìý
|
|
Performance Products
|
Ìý
|
Ìý
|
86
|
Ìý
|
Ìý
|
141
|
Ìý
|
Ìý
|
178
|
Ìý
|
Ìý
|
262
|
Ìý
|
|
Advanced Materials
|
Ìý
|
Ìý
|
58
|
Ìý
|
Ìý
|
58
|
Ìý
|
Ìý
|
118
|
Ìý
|
Ìý
|
116
|
Ìý
|
|
Textile Effects
|
Ìý
|
Ìý
|
24
|
Ìý
|
Ìý
|
23
|
Ìý
|
Ìý
|
42
|
Ìý
|
Ìý
|
40
|
Ìý
|
|
Pigments and Additives
|
Ìý
|
Ìý
|
31
|
Ìý
|
Ìý
|
35
|
Ìý
|
Ìý
|
46
|
Ìý
|
Ìý
|
56
|
Ìý
|
|
Corporate and other(2)
|
Ìý
|
Ìý
|
(43
|
)
|
Ìý
|
(30
|
)
|
Ìý
|
(85
|
)
|
Ìý
|
(65
|
)
|
|
�
|
�
|
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|
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|
�
|
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|
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|
�
|
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|
â€� Ìý
|
�
|
â€� Ìý
|
â€� Ìý
|
�
|
|
Total
|
Ìý
|
Ìý
|
327
|
Ìý
|
Ìý
|
386
|
Ìý
|
Ìý
|
601
|
Ìý
|
Ìý
|
673
|
Ìý
|
|
Reconciliation of adjusted EBITDA to net income:
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
Interest expense, net
|
Ìý
|
Ìý
|
(53
|
)
|
Ìý
|
(56
|
)
|
Ìý
|
(106
|
)
|
Ìý
|
(114
|
)
|
|
Income tax expense—continuing operations
|
Ìý
|
Ìý
|
(31
|
)
|
Ìý
|
(34
|
)
|
Ìý
|
(58
|
)
|
Ìý
|
(37
|
)
|
|
Income tax benefit (expense)—discontinued operations
|
Ìý
|
Ìý
|
�
|
Ìý
|
Ìý
|
(1
|
)
|
Ìý
|
1
|
Ìý
|
Ìý
|
(2
|
)
|
|
Depreciation and amortization
|
Ìý
|
Ìý
|
(106
|
)
|
Ìý
|
(95
|
)
|
Ìý
|
(203
|
)
|
Ìý
|
(187
|
)
|
|
Net income attributable to noncontrolling interests
|
Ìý
|
Ìý
|
7
|
Ìý
|
Ìý
|
10
|
Ìý
|
Ìý
|
13
|
Ìý
|
Ìý
|
20
|
Ìý
|
|
Other adjustments:
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
Acquisition and integration expenses and purchase accounting adjustments
|
Ìý
|
Ìý
|
(4
|
)
|
Ìý
|
(12
|
)
|
Ìý
|
(13
|
)
|
Ìý
|
(21
|
)
|
|
EBITDA of discontinued operations
|
Ìý
|
Ìý
|
(1
|
)
|
Ìý
|
(1
|
)
|
Ìý
|
(3
|
)
|
Ìý
|
(2
|
)
|
|
Loss on disposition of business/assets
|
Ìý
|
Ìý
|
�
|
Ìý
|
Ìý
|
(1
|
)
|
Ìý
|
�
|
Ìý
|
Ìý
|
(1
|
)
|
|
Loss on early extinguishment of debt
|
Ìý
|
Ìý
|
(2
|
)
|
Ìý
|
(20
|
)
|
Ìý
|
(2
|
)
|
Ìý
|
(23
|
)
|
|
Certain legal settlements and related expenses
|
Ìý
|
Ìý
|
�
|
Ìý
|
Ìý
|
(1
|
)
|
Ìý
|
(1
|
)
|
Ìý
|
(2
|
)
|
|
Amortization of pension and postretirement actuarial losses
|
Ìý
|
Ìý
|
(21
|
)
|
Ìý
|
(21
|
)
|
Ìý
|
(37
|
)
|
Ìý
|
(41
|
)
|
|
Net plant incident remediation credits
|
Ìý
|
Ìý
|
7
|
Ìý
|
Ìý
|
�
|
Ìý
|
Ìý
|
6
|
Ìý
|
Ìý
|
�
|
Ìý
|
|
Restructuring, impairment and plant closing and transition costsÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý
|
Ìý
|
Ìý
|
(30
|
)
|
Ìý
|
(115
|
)
|
Ìý
|
(43
|
)
|
Ìý
|
(209
|
)
|
|
�
|
�
|
â€� Ìý
|
â€� Ìý
|
�
|
â€� Ìý
|
â€� Ìý
|
�
|
â€� Ìý
|
â€� Ìý
|
�
|
â€� Ìý
|
â€� Ìý
|
�
|
|
Net income
|
Ìý
|
$
|
93
|
Ìý
|
$
|
39
|
Ìý
|
$
|
155
|
Ìý
|
$
|
54
|
Ìý
|
|
�
|
�
|
â€� Ìý
|
â€� Ìý
|
�
|
â€� Ìý
|
â€� Ìý
|
�
|
â€� Ìý
|
â€� Ìý
|
�
|
â€� Ìý
|
â€� Ìý
|
�
|
|
�
|
�
|
â€� Ìý
|
â€� Ìý
|
�
|
â€� Ìý
|
â€� Ìý
|
�
|
â€� Ìý
|
â€� Ìý
|
�
|
â€� Ìý
|
â€� Ìý
|
�
|
|
Ìý
|
Ìý
|
Ìý
|
|
(1)ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý
|
Beginning in the second quarter of 2016, we used segment adjusted EBITDA as the measure of each segment's profit or loss. We believe that adjusted EBITDA more accurately reflects what management uses to make decisions about resources to be allocated to the segments and assess their financial performance. We have restated the measure of each segment's profit or loss in the prior periods disclosed to reflect adjusted EBITDA.
|
Segment adjusted EBITDA is defined as net income of ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation or ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ÌýÌýÌýÌýInternational, as appropriate, before interest, income tax, depreciation and amortization, net income attributable to noncontrolling interests and certain Corporate and other items, as well as eliminating the following adjustments: (a)Ìýacquisition and integration expenses and purchase accounting adjustments; (b)ÌýEBITDA from discontinued operations; (c)Ìýloss on disposition of businesses/assets; (d)Ìýloss on early extinguishment of debt; (e)Ìýcertain legal settlements and related expenses; (f)Ìýamortization of pension and postretirement actuarial losses; (g)Ìýnet plant incident remediation credits; and (h)Ìýrestructuring, impairment, plant closing and transition costs.
|
Ìý
|
Ìý
|
Ìý
|
|
(2)ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý
|
Corporate and other includes unallocated corporate overhead, unallocated foreign exchange gains and losses, LIFO inventory valuation reserve adjustments, loss on early extinguishment of debt, unallocated restructuring, impairment and plant closing costs, nonoperating income and expense, benzene sales and gains and losses on the disposition of corporate assets.
|
Ìý
|