ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾

Annual report pursuant to Section 13 and 15(d)

OPERATING SEGMENT INFORMATION

v3.19.3.a.u2
OPERATING SEGMENT INFORMATION
 12 Months Ended
Dec. 31, 2019
OPERATING SEGMENT INFORMATION Ìý
OPERATING SEGMENT INFORMATION

27. OPERATING SEGMENT INFORMATION

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 four operating segments, which are also our reportable segments: Polyurethanes, Performance Products, Advanced Materials and Textile Effects. We have organized our business and derived our operating segments around differences in product lines. Beginning in the third quarter of 2019, we reported the results of our Chemical Intermediates Businesses as discontinued operations and the related assets and liabilities as held for sale in our consolidated financial statements for all periods presented. See “Note 4. Discontinued Operations and Business Dispositions—Sale of Chemical Intermediates Businesses.� In addition, in connection with the Venator IPO in August 2017, we separated Venator and, beginning in the third quarter of 2017, we reported the results of operations of Venator as discontinued operations in our consolidated financial statements. On December 3, 2018, we further reduced our remaining investment in Venator by the sale of Venator ordinary shares which allowed us to deconsolidate Venator and account for our remaining interest in Venator as an equity method investment using the fair

value option post consolidation. See “Note 4. Discontinued Operations and Business Dispositions—Separation and Deconsolidation of Venator.�

�

The major products of each reportable operating segment are as follows:

�

�

�

�

Segment

ÌýÌýÌýÌý

Products

Polyurethanes

�

MDI, polyols, TPU and aniline

PerformanceÌýProducts

�

Specialty amines, ethyleneamines, maleic anhydride and technology licenses

Advanced Materials

�

Basic liquid and solid epoxy resins; specialty resin compounds; cross-linking, matting and curing agents; epoxy, acrylic and polyurethane-based formulations

Textile Effects

�

Textile chemicals, dyes and digital inks

�

Sales between segments are generally recognized at external market prices and are eliminated in consolidation. We use adjusted EBITDA to measure the financial performance of our global business units and for reporting the results of our operating segments. This measure includes all operating items relating to the businesses. 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):

�

�

�

�

�

�

�

�

�

�

Year ended DecemberÌý31,Ìý

�

2019

ÌýÌýÌýÌý

2018

ÌýÌýÌýÌý

2017

Revenues:

�

�

�

�

�

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

Polyurethanes

$

3,911

�

$

4,282

�

$

3,764

Performance Products

�

1,158

�

�

1,301

�

�

1,156

Advanced Materials

�

1,044

�

�

1,116

�

�

1,040

Textile Effects

�

763

�

�

824

�

�

776

Corporate and eliminations

�

(79)

�

�

81

�

�

109

Total

$

6,797

�

$

7,604

�

$

6,845

�

�

�

�

�

�

�

�

�

ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation:

�

�

�

�

�

�

�

�

Segment adjusted EBITDA(1):

�

�

�

�

�

�

�

�

Polyurethanes

$

548

�

$

809

�

$

776

Performance Products

�

168

�

�

197

�

�

155

Advanced Materials

�

201

�

�

225

�

�

219

Textile Effects

�

84

�

�

101

�

�

83

Corporate and other(2)

�

(155)

�

�

(171)

�

�

(193)

Total

�

846

�

�

1,161

�

�

1,040

Reconciliation of adjusted EBITDA to net income:

�

�

�

�

�

�

�

�

Interest expense—continuing operations

�

(111)

�

�

(115)

�

�

(165)

Interest expense—discontinued operations

�

�

�

�

(36)

�

�

(19)

Income tax benefit (expense)—continuing operations

�

38

�

�

(45)

�

�

(20)

Income tax expense—discontinued operations

�

(35)

�

�

(86)

�

�

(111)

Depreciation and amortization—continuing operations

�

(270)

�

�

(255)

�

�

(236)

Depreciation and amortization—discontinued operations

�

(61)

�

�

(88)

�

�

(151)

Net income attributable to noncontrolling interests

�

36

�

�

313

�

�

105

Other adjustments:

�

�

�

�

�

�

�

�

Business acquisition and integration expenses and purchase accounting inventory adjustments

�

(5)

�

�

(9)

�

�

(19)

Merger costs

�

�

�

�

(2)

�

�

(28)

EBITDA from discontinued operations

�

265

�

�

171

�

�

511

Noncontrolling interest of discontinued operations

�

�

�

�

(232)

�

�

(49)

Fair value adjustments to Venator investment

�

(18)

�

�

(62)

�

�

�

Loss on early extinguishment of debt

�

(23)

�

�

(3)

�

�

(54)

Certain legal settlements and related (expenses) income

�

(6)

�

�

(1)

�

�

11

(Loss) gain on sale of businesses/assets

�

(21)

�

�

�

�

�

9

Certain nonrecurring information technology project implementation costs

�

(4)

�

�

�

�

�

�

Amortization of pension and postretirement actuarial losses

�

(66)

�

�

(67)

�

�

(69)

Plant incident remediation costs

�

(8)

�

�

�

�

�

(1)

U.S. Tax Reform Act impact on noncontrolling interest

�

�

�

�

�

�

�

6

Restructuring, impairment and plant closing and transition credits (costs)

�

41

�

�

6

�

�

(19)

Net income

$

598

�

$

650

�

$

741

�

�

�

�

�

�

�

�

�

�

�

�

�

Year ended December 31,

�

ÌýÌýÌýÌý

2019

ÌýÌýÌýÌý

2018

ÌýÌýÌýÌý

2017

Depreciation and Amortization:

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

Polyurethanes

�

$

120

�

$

108

�

$

92

Performance Products

�

Ìý

81

�

Ìý

78

�

Ìý

78

Advanced Materials

�

Ìý

36

�

Ìý

37

�

Ìý

33

Textile Effects

�

Ìý

16

�

Ìý

16

�

Ìý

14

Corporate and other

�

Ìý

17

�

Ìý

16

�

Ìý

19

Total

�

$

270

�

$

255

�

$

236

�

�

�

�

�

�

�

�

�

�

�

�

�

Year ended December 31,

�

ÌýÌýÌýÌý

2019

ÌýÌýÌýÌý

2018

ÌýÌýÌýÌý

2017

Capital Expenditures:

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

Polyurethanes

�

$

185

�

$

153

�

$

158

Performance Products

�

Ìý

32

�

Ìý

48

�

Ìý

35

Advanced Materials

�

Ìý

24

�

Ìý

20

�

Ìý

21

Textile Effects

�

Ìý

22

�

Ìý

20

�

Ìý

16

Corporate and other

�

Ìý

11

�

Ìý

10

�

Ìý

4

Total

�

$

274

�

$

251

�

$

234

�

�

�

�

�

�

�

�

�

�

DecemberÌý31,Ìý

�

ÌýÌýÌýÌý

2019

ÌýÌýÌýÌý

2018

Total Assets:

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

Polyurethanes

�

$

3,437

�

$

3,129

Performance Products

�

Ìý

1,125

�

Ìý

1,161

Advanced Materials

�

Ìý

774

�

Ìý

796

Textile Effects

�

Ìý

511

�

Ìý

571

Corporate and other

�

Ìý

1,265

�

Ìý

1,187

Total

�

$

7,112

�

$

6,844

�

�

�

�

�

�

�

�

�

�

DecemberÌý31,Ìý

�

ÌýÌýÌýÌý

2019

ÌýÌýÌýÌý

2018

Goodwill:

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

Polyurethanes

�

$

177

�

$

173

Performance Products

�

Ìý

16

�

Ìý

16

Advanced Materials

�

Ìý

83

�

Ìý

86

Total

�

$

276

�

$

275

�

�

�

�

�

�

�

�

�

�

�

Year ended DecemberÌý31,Ìý

�

2019

ÌýÌýÌýÌý

2018

ÌýÌýÌýÌý

2017

ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International:

�

�

�

�

�

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

Segment adjusted EBITDA(1):

�

�

�

�

�

�

�

�

Polyurethanes

$

548

�

$

809

�

$

776

Performance Products

�

168

�

�

197

�

�

155

Advanced Materials

�

201

�

�

225

�

�

219

Textile Effects

�

84

�

�

101

�

�

83

Corporate and other(2)

�

(150)

�

�

(167)

�

�

(189)

Total

�

851

�

�

1,165

�

�

1,044

Reconciliation of adjusted EBITDA to net income:

�

�

�

�

�

�

�

�

Interest expense—continuing operations

�

(126)

�

�

(136)

�

�

(181)

Interest expense—discontinued operations

�

�

�

�

(36)

�

�

(19)

Income tax benefit (expense)—continuing operations

�

41

�

�

(41)

�

�

(17)

Income tax expense—discontinued operations

�

(35)

�

�

(86)

�

�

(111)

Depreciation and amortization—continuing operations

�

(270)

�

�

(252)

�

�

(228)

Depreciation and amortization—discontinued operations

�

(61)

�

�

(88)

�

�

(151)

Net income attributable to noncontrolling interests

�

36

�

�

313

�

�

105

Other adjustments:

�

�

�

�

�

�

�

�

Business acquisition and integration expenses and purchase accounting inventory adjustments

�

(5)

�

�

(9)

�

�

(23)

Merger costs

�

�

�

�

(2)

�

�

(28)

EBITDA from discontinued operations

�

265

�

�

171

�

�

511

Noncontrolling interest of discontinued operations

�

�

�

�

(232)

�

�

(49)

Fair value adjustments to Venator investment

�

(18)

�

�

(62)

�

�

�

Loss on early extinguishment of debt

�

(23)

�

�

(3)

�

�

(54)

Certain legal settlements and related (expenses) income

�

(6)

�

�

(1)

�

�

11

(Loss) gain on sale of businesses/assets

�

(21)

�

�

�

�

�

10

Certain nonrecurring information technology project implementation costs

�

(4)

�

�

�

�

�

�

Amortization of pension and postretirement actuarial losses

�

(70)

�

�

(71)

�

�

(72)

Plant incident remediation costs

�

(8)

�

�

�

�

�

(1)

U.S. Tax Reform Act impact on noncontrolling interest

�

�

�

�

�

�

�

6

Restructuring, impairment and plant closing and transition credits (costs)

�

41

�

�

6

�

�

(19)

Net income

$

587

�

$

636

�

$

734

�

�

�

�

�

�

�

�

�

�

�

�

�

Year ended December 31,

�

ÌýÌýÌýÌý

2019

ÌýÌýÌýÌý

2018

ÌýÌýÌýÌý

2017

Depreciation and Amortization:

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

Polyurethanes

�

$

120

�

$

108

�

$

92

Performance Products

�

Ìý

81

�

Ìý

78

�

Ìý

78

Advanced Materials

�

Ìý

36

�

Ìý

37

�

Ìý

33

Textile Effects

�

Ìý

16

�

Ìý

16

�

Ìý

14

Corporate and other

�

Ìý

17

�

Ìý

13

�

Ìý

11

Total

�

$

270

�

$

252

�

$

228

�

�

�

�

�

�

�

�

�

�

�

�

�

Year ended December 31,

�

ÌýÌýÌýÌý

2019

ÌýÌýÌýÌý

2018

ÌýÌýÌýÌý

2017

Capital Expenditures:

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

Polyurethanes

�

$

185

�

$

153

�

$

158

Performance Products

�

Ìý

32

�

Ìý

48

�

Ìý

35

Advanced Materials

�

Ìý

24

�

Ìý

20

�

Ìý

21

Textile Effects

�

Ìý

22

�

Ìý

20

�

Ìý

16

Corporate and other

�

Ìý

11

�

Ìý

10

�

Ìý

4

Total

�

$

274

�

$

251

�

$

234

�

�

�

�

�

�

�

�

�

�

DecemberÌý31,Ìý

�

ÌýÌýÌýÌý

2019

ÌýÌýÌýÌý

2018

Total Assets:

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

Polyurethanes

�

$

3,437

�

$

3,129

Performance Products

�

Ìý

1,125

�

Ìý

1,161

Advanced Materials

�

Ìý

774

�

Ìý

796

Textile Effects

�

Ìý

511

�

Ìý

571

Corporate and other

�

Ìý

1,668

�

Ìý

1,569

Total

�

$

7,515

�

$

7,226

�

�

�

�

�

�

�

�

�

�

DecemberÌý31,Ìý

�

ÌýÌýÌýÌý

2019

ÌýÌýÌýÌý

2018

Goodwill:

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

Polyurethanes

�

$

177

�

$

173

Performance Products

�

Ìý

16

�

Ìý

16

Advanced Materials

�

Ìý

83

�

Ìý

86

Total

�

$

276

�

$

275

�

(1)ÌýÌýÌýÌýÌýÌýÌýÌýÌýWe use segment adjusted EBITDA as the measure of each segment’s profit or loss. We believe that segment adjusted EBITDA more accurately reflects what management uses to make decisions about resources to be allocated to the segments and assess their financial performance. 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 and purchase accounting inventory adjustments; (b) merger costs; (c)ÌýEBITDA from discontinued operations; (d) noncontrolling interest of discontinued operations; (e) fair value adjustments to Venator investment; (f) loss on early extinguishment of debt; (g) certain legal settlements and related income (expenses); (h) gain on sale of businesses/assets; (i) certain nonrecurring information technology project implementation costs; (j) amortization of pension and postretirement actuarial losses; (k) plant incident remediation costs; (l) U.S. Tax Reform Act impact on noncontrolling interest; and (m) restructuring, impairment, plant closing and transition credits (costs).

(2)ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýCorporate and other includes unallocated corporate overhead, unallocated foreign exchange gains and losses, LIFO inventory valuation reserve adjustments, nonoperating income and expense, benzene sales and gains and losses on the disposition of corporate assets.

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Year ended December 31,

�

ÌýÌýÌýÌý

2019

ÌýÌýÌýÌý

2018

ÌýÌýÌýÌý

2017

Revenues by geographic area(1):

�

�

�

�

�

�

�

�

�

United States

�

$

2,025

�

$

2,136

�

$

1,828

China

�

Ìý

1,076

�

Ìý

1,260

�

Ìý

1,122

Germany

�

Ìý

541

�

Ìý

537

�

Ìý

507

India

�

Ìý

319

�

Ìý

352

�

Ìý

336

Other nations

�

Ìý

2,836

�

Ìý

3,319

�

Ìý

3,052

Total

�

$

6,797

�

$

7,604

�

$

6,845

�

�

�

�

�

�

�

�

�

�

DecemberÌý31,Ìý

�

ÌýÌýÌýÌý

2019

ÌýÌýÌýÌý

2018

Long-lived assets(2):

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

�

�

ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

United States

�

$

970

�

$

944

The Netherlands

�

Ìý

334

�

Ìý

331

China

�

Ìý

247

�

Ìý

247

Saudi Arabia

�

Ìý

154

�

Ìý

161

Germany

�

Ìý

137

�

Ìý

143

Switzerland

�

�

106

�

�

108

Singapore

�

Ìý

94

�

Ìý

96

Other nations

�

Ìý

341

�

Ìý

323

Total

�

$

2,383

�

$

2,353

�

(1)ÌýÌýÌýÌýGeographic information for revenues is based upon countries into which product is sold.

�

(2)ÌýÌýÌýÌýLong-lived assets consist of property, plant and equipment, net.

�