| OPERATING SEGMENT INFORMATION |
18. OPERATING SEGMENT INFORMATION
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We derive our revenues, earnings and cash flows from the manufacture and sale of a wide variety of differentiated and commodity chemical products. We have five operating segments, which are also our reportable 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.
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The major products of each reportable operating segment are as follows:
Ìý
|
Segment
|
ÌýÌýÌýÌý
|
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 digital inks
|
|
Pigments and Additives
|
Ìý
|
titanium dioxide, functional additives, color pigments, timber treatment and water treatment chemicals
|
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Sales 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):
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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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|
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|
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|
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|
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|
|
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|
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|
ThreeÌýmonths
|
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|
SixÌýmonths
|
|
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|
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|
ended
|
Ìý
|
ended
|
|
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|
Ìý
|
JuneÌý30,Ìý
|
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|
JuneÌý30,Ìý
|
|
Ìý
|
ÌýÌýÌýÌý
|
2017
|
ÌýÌýÌýÌý
|
2016
|
ÌýÌýÌýÌý
|
2017
|
ÌýÌýÌýÌý
|
2016
|
|
Revenues:
|
ÌýÌýÌýÌý
|
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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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|
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|
|
Polyurethanes
|
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|
$
|
1,022
|
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|
$
|
976
|
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|
$
|
1,975
|
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|
$
|
1,812
|
|
Performance Products
|
Ìý
|
Ìý
|
561
|
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|
Ìý
|
566
|
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|
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|
1,094
|
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|
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|
1,102
|
|
Advanced Materials
|
Ìý
|
Ìý
|
260
|
Ìý
|
Ìý
|
261
|
Ìý
|
Ìý
|
519
|
Ìý
|
Ìý
|
527
|
|
Textile Effects
|
Ìý
|
Ìý
|
205
|
Ìý
|
Ìý
|
198
|
Ìý
|
Ìý
|
393
|
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|
Ìý
|
383
|
|
Pigments and Additives
|
Ìý
|
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|
562
|
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|
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|
576
|
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|
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|
1,099
|
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|
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|
1,116
|
|
Corporate and eliminations
|
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|
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|
Ìý6
|
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|
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|
(33)
|
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|
Ìý
|
Ìý5
|
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|
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|
(41)
|
|
Total
|
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|
$
|
2,616
|
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|
$
|
2,544
|
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|
$
|
5,085
|
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|
$
|
4,899
|
|
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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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|
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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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|
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|
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|
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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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|
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|
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|
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|
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|
|
Polyurethanes
|
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|
$
|
167
|
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|
$
|
171
|
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|
$
|
311
|
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|
$
|
302
|
|
Performance Products
|
Ìý
|
Ìý
|
102
|
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|
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|
86
|
Ìý
|
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|
186
|
Ìý
|
Ìý
|
178
|
|
Advanced Materials
|
Ìý
|
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|
56
|
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|
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|
58
|
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|
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|
110
|
Ìý
|
Ìý
|
118
|
|
Textile Effects
|
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|
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|
24
|
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|
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|
24
|
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|
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|
45
|
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|
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|
42
|
|
Pigments and Additives
|
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|
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|
114
|
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|
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|
31
|
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|
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|
183
|
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|
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|
46
|
|
Corporate and other(2)
|
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|
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|
(50)
|
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|
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|
(45)
|
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|
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|
(93)
|
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|
Ìý
|
(87)
|
|
Total
|
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|
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|
413
|
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|
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|
325
|
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|
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|
742
|
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|
Ìý
|
599
|
|
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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|
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|
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|
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|
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|
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|
|
Interest expense
|
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|
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|
(47)
|
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|
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|
(50)
|
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|
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|
(95)
|
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|
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|
(100)
|
|
Income tax expense—continuing operations
|
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|
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|
(45)
|
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|
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|
(32)
|
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|
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|
(68)
|
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|
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|
(59)
|
|
Income tax benefit—discontinued operations
|
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|
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|
Ìýâ€�
|
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|
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|
Ìýâ€�
|
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|
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|
Ìý1
|
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|
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|
Ìý1
|
|
Depreciation and amortization
|
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|
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|
(108)
|
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|
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|
(109)
|
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|
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|
(214)
|
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|
Ìý
|
(209)
|
|
Net income attributable to noncontrolling interests
|
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|
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|
16
|
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|
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|
Ìý7
|
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|
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|
32
|
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|
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|
13
|
|
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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|
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|
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|
|
Business acquisition and integration expenses
|
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|
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|
(4)
|
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|
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|
(4)
|
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|
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|
(7)
|
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|
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|
(13)
|
|
Merger costs
|
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|
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|
(6)
|
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|
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|
Ìýâ€�
|
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|
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|
(6)
|
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|
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|
Ìýâ€�
|
|
EBITDA of discontinued operations
|
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|
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|
(1)
|
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|
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|
(1)
|
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|
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|
(3)
|
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|
Ìý
|
(3)
|
|
Loss on early extinguishment of debt
|
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|
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|
(1)
|
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|
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|
(2)
|
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|
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|
(1)
|
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|
Ìý
|
(2)
|
|
Certain legal settlements and related expenses
|
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|
Ìý
|
(1)
|
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|
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|
Ìýâ€�
|
Ìý
|
Ìý
|
(1)
|
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|
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|
(1)
|
|
Gain on sale of assets
|
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|
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|
Ìý9
|
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|
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|
Ìýâ€�
|
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|
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|
Ìý9
|
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|
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|
Ìýâ€�
|
|
Amortization of pension and postretirement actuarial losses
|
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|
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|
(22)
|
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|
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|
(17)
|
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|
Ìý
|
(44)
|
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|
Ìý
|
(33)
|
|
Net plant incident credits (costs)
|
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|
Ìý
|
Ìý2
|
Ìý
|
Ìý
|
Ìý7
|
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|
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|
(3)
|
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|
Ìý
|
Ìý6
|
|
Restructuring, impairment and plant closing costs
|
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|
Ìý
|
(10)
|
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|
Ìý
|
(30)
|
Ìý
|
Ìý
|
(46)
|
Ìý
|
Ìý
|
(43)
|
|
Business separation expenses
|
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|
Ìý
|
(12)
|
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|
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|
Ìýâ€�
|
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|
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|
(21)
|
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|
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|
Ìýâ€�
|
|
Net income
|
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|
$
|
183
|
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|
$
|
94
|
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|
$
|
275
|
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|
$
|
156
|
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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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|
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|
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|
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|
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|
|
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|
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|
ThreeÌýmonths
|
Ìý
|
SixÌýmonths
|
|
Ìý
|
Ìý
|
ended
|
Ìý
|
ended
|
|
Ìý
|
Ìý
|
JuneÌý30,Ìý
|
Ìý
|
JuneÌý30,Ìý
|
|
Ìý
|
ÌýÌýÌýÌý
|
2017
|
ÌýÌýÌýÌý
|
2016
|
ÌýÌýÌýÌý
|
2017
|
ÌýÌýÌýÌý
|
2016
|
|
ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International:
|
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|
Ìý
|
Ìý
|
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|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
Segment adjusted EBITDA(1):
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
Polyurethanes
|
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|
$
|
167
|
Ìý
|
$
|
171
|
Ìý
|
$
|
311
|
Ìý
|
$
|
302
|
|
Performance Products
|
Ìý
|
Ìý
|
102
|
Ìý
|
Ìý
|
86
|
Ìý
|
Ìý
|
186
|
Ìý
|
Ìý
|
178
|
|
Advanced Materials
|
Ìý
|
Ìý
|
56
|
Ìý
|
Ìý
|
58
|
Ìý
|
Ìý
|
110
|
Ìý
|
Ìý
|
118
|
|
Textile Effects
|
Ìý
|
Ìý
|
24
|
Ìý
|
Ìý
|
24
|
Ìý
|
Ìý
|
45
|
Ìý
|
Ìý
|
42
|
|
Pigments and Additives
|
Ìý
|
Ìý
|
114
|
Ìý
|
Ìý
|
31
|
Ìý
|
Ìý
|
183
|
Ìý
|
Ìý
|
46
|
|
Corporate and other(2)
|
Ìý
|
Ìý
|
(50)
|
Ìý
|
Ìý
|
(43)
|
Ìý
|
Ìý
|
(91)
|
Ìý
|
Ìý
|
(85)
|
|
Total
|
Ìý
|
Ìý
|
413
|
Ìý
|
Ìý
|
327
|
Ìý
|
Ìý
|
744
|
Ìý
|
Ìý
|
601
|
|
Reconciliation of adjusted EBITDA to net income:
|
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|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
Interest expense
|
Ìý
|
Ìý
|
(51)
|
Ìý
|
Ìý
|
(53)
|
Ìý
|
Ìý
|
(102)
|
Ìý
|
Ìý
|
(106)
|
|
Income tax expense—continuing operations
|
Ìý
|
Ìý
|
(44)
|
Ìý
|
Ìý
|
(31)
|
Ìý
|
Ìý
|
(67)
|
Ìý
|
Ìý
|
(58)
|
|
Income tax benefit—discontinued operations
|
Ìý
|
Ìý
|
Ìýâ€�
|
Ìý
|
Ìý
|
Ìýâ€�
|
Ìý
|
Ìý
|
Ìý1
|
Ìý
|
Ìý
|
Ìý1
|
|
Depreciation and amortization
|
Ìý
|
Ìý
|
(104)
|
Ìý
|
Ìý
|
(106)
|
Ìý
|
Ìý
|
(208)
|
Ìý
|
Ìý
|
(203)
|
|
Net income attributable to noncontrolling interests
|
Ìý
|
Ìý
|
16
|
Ìý
|
Ìý
|
Ìý7
|
Ìý
|
Ìý
|
32
|
Ìý
|
Ìý
|
13
|
|
Other adjustments:
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
Business acquisition and integration expenses
|
Ìý
|
Ìý
|
(4)
|
Ìý
|
Ìý
|
(4)
|
Ìý
|
Ìý
|
(7)
|
Ìý
|
Ìý
|
(13)
|
|
Merger costs
|
Ìý
|
Ìý
|
(6)
|
Ìý
|
Ìý
|
Ìýâ€�
|
Ìý
|
Ìý
|
(6)
|
Ìý
|
Ìý
|
Ìýâ€�
|
|
EBITDA of discontinued operations
|
Ìý
|
Ìý
|
(1)
|
Ìý
|
Ìý
|
(1)
|
Ìý
|
Ìý
|
(3)
|
Ìý
|
Ìý
|
(3)
|
|
Loss on early extinguishment of debt
|
Ìý
|
Ìý
|
(1)
|
Ìý
|
Ìý
|
(2)
|
Ìý
|
Ìý
|
(1)
|
Ìý
|
Ìý
|
(2)
|
|
Certain legal settlements and related expenses
|
Ìý
|
Ìý
|
(1)
|
Ìý
|
Ìý
|
Ìýâ€�
|
Ìý
|
Ìý
|
(1)
|
Ìý
|
Ìý
|
(1)
|
|
Gain on sale of assets
|
Ìý
|
Ìý
|
Ìý9
|
Ìý
|
Ìý
|
Ìýâ€�
|
Ìý
|
Ìý
|
Ìý9
|
Ìý
|
Ìý
|
Ìýâ€�
|
|
Amortization of pension and postretirement actuarial losses
|
Ìý
|
Ìý
|
(24)
|
Ìý
|
Ìý
|
(21)
|
Ìý
|
Ìý
|
(48)
|
Ìý
|
Ìý
|
(37)
|
|
Net plant incident credits (costs)
|
Ìý
|
Ìý
|
Ìý2
|
Ìý
|
Ìý
|
Ìý7
|
Ìý
|
Ìý
|
(3)
|
Ìý
|
Ìý
|
Ìý6
|
|
Restructuring, impairment and plant closing costs
|
Ìý
|
Ìý
|
(10)
|
Ìý
|
Ìý
|
(30)
|
Ìý
|
Ìý
|
(46)
|
Ìý
|
Ìý
|
(43)
|
|
Business separation expenses
|
Ìý
|
Ìý
|
(12)
|
Ìý
|
Ìý
|
Ìýâ€�
|
Ìý
|
Ìý
|
(21)
|
Ìý
|
Ìý
|
Ìýâ€�
|
|
Net income
|
Ìý
|
$
|
182
|
Ìý
|
$
|
$ 93
|
Ìý
|
$
|
$ 273
|
Ìý
|
$
|
$ 155
|
|
(1)
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Segment adjusted EBITDA is defined as net income of ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation or ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International, 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) business acquisition and integration expenses; (b) merger costs; (c) EBITDA from discontinued operations; (d) loss on early extinguishment of debt; (e) certain legal settlements and related expenses; (f) gain on sale of assets; (g) amortization of pension and postretirement actuarial losses; (h) net plant incident credits (costs); (i) restructuring, impairment and plant closing costs; and (j) business separation expenses.
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(2)
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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.
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