Quarterly report pursuant to Section 13 or 15(d)

OPERATING SEGMENT INFORMATION

v3.5.0.2
OPERATING SEGMENT INFORMATION
9 Months Ended
Sep. 30, 2016
OPERATING SEGMENT INFORMATION  
OPERATING SEGMENT INFORMATION

 

17. 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 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.

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

                                                                                                                                                                                    

Segment

 

Products

Polyurethanes

 

MDI, PO, polyols, PG, TPU, aniline and MTBE

Performance Products

 

amines, surfactants, LAB, maleic anhydride, other performance chemicals, EG, olefins 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

Pigments and Additives

 

titanium dioxide, functional additives, color pigments, timber treatment and water treatment chemicals

        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):

                                                                                                                                                                                    

 

 

Three months
ended
September 30,

 

Nine months
ended
September 30,

 

 

 

2016

 

2015

 

2016

 

2015

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

$

891

 

$

1,017

 

$

2,703

 

$

2,902

 

Performance Products

 

 

509

 

 

618

 

 

1,611

 

 

1,949

 

Advanced Materials

 

 

247

 

 

275

 

 

774

 

 

847

 

Textile Effects

 

 

184

 

 

196

 

 

567

 

 

618

 

Pigments and Additives

 

 

532

 

 

543

 

 

1,648

 

 

1,707

 

Corporate and eliminations

 

 

 

 

(11

)

 

(41

)

 

(56

)

​  

​  

​  

​  

​  

​  

​  

​  

Total

 

$

2,363

 

$

2,638

 

$

7,262

 

$

7,967

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Huntsman Corporation:

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment adjusted EBITDA(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

$

137

 

$

168

 

$

439

 

$

432

 

Performance Products

 

 

70

 

 

122

 

 

248

 

 

384

 

Advanced Materials

 

 

55

 

 

56

 

 

173

 

 

172

 

Textile Effects

 

 

17

 

 

10

 

 

59

 

 

50

 

Pigments and Additives

 

 

38

 

 

5

 

 

84

 

 

61

 

Corporate and other(2)

 

 

(45

)

 

(50

)

 

(132

)

 

(118

)

​  

​  

​  

​  

​  

​  

​  

​  

Total

 

 

272

 

 

311

 

 

871

 

 

981

 

Reconciliation of adjusted EBITDA to net income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(52

)

 

(49

)

 

(152

)

 

(158

)

Income tax benefit (expense)—continuing operations

 

 

1

 

 

(49

)

 

(58

)

 

(85

)

Income tax benefit (expense)—discontinued operations

 

 

 

 

1

 

 

1

 

 

(1

)

Depreciation and amortization

 

 

(113

)

 

(103

)

 

(322

)

 

(297

)

Net income attributable to noncontrolling interests

 

 

9

 

 

8

 

 

22

 

 

28

 

Other adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Business acquisition, integration and separation expenses

 

 

(8

)

 

(10

)

 

(21

)

 

(31

)

EBITDA of discontinued operations

 

 

(1

)

 

(1

)

 

(4

)

 

(3

)

Gain (loss) on disposition of business/assets

 

 

22

 

 

 

 

22

 

 

(1

)

Loss on early extinguishment of debt

 

 

(1

)

 

(8

)

 

(3

)

 

(31

)

Certain legal settlements and related expenses

 

 

 

 

(1

)

 

(1

)

 

(3

)

Amortization of pension and postretirement actuarial losses          

 

 

(16

)

 

(19

)

 

(49

)

 

(56

)

Net plant incident remediation (costs) credits

 

 

(4

)

 

(3

)

 

2

 

 

(3

)

Restructuring, impairment and plant closing and transition costs

 

 

(45

)

 

(14

)

 

(88

)

 

(223

)

​  

​  

​  

​  

​  

​  

​  

​  

Net income

 

$

64

 

$

63

 

$

220

 

$

117

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

                                                                                                                                                                                    

 

 

Three months
ended
September 30,

 

Nine months
ended
September 30,

 

 

 

2016

 

2015

 

2016

 

2015

 

Huntsman International:

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment adjusted EBITDA(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

$

137

 

$

168

 

$

439

 

$

432

 

Performance Products

 

 

70

 

 

122

 

 

248

 

 

384

 

Advanced Materials

 

 

55

 

 

56

 

 

173

 

 

172

 

Textile Effects

 

 

17

 

 

10

 

 

59

 

 

50

 

Pigments and Additives

 

 

38

 

 

5

 

 

84

 

 

61

 

Corporate and other(2)

 

 

(44

)

 

(49

)

 

(129

)

 

(114

)

​  

​  

​  

​  

​  

​  

​  

​  

Total

 

 

273

 

 

312

 

 

874

 

 

985

 

Reconciliation of adjusted EBITDA to net income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(55

)

 

(51

)

 

(161

)

 

(165

)

Income tax expense—continuing operations

 

 

 

 

(48

)

 

(58

)

 

(85

)

Income tax benefit (expense)—discontinued operations

 

 

 

 

1

 

 

1

 

 

(1

)

Depreciation and amortization

 

 

(109

)

 

(100

)

 

(312

)

 

(287

)

Net income attributable to noncontrolling interests

 

 

9

 

 

8

 

 

22

 

 

28

 

Other adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Business acquisition, integration and separation expenses

 

 

(8

)

 

(10

)

 

(21

)

 

(31

)

EBITDA of discontinued operations

 

 

(1

)

 

(1

)

 

(4

)

 

(3

)

Gain (loss) on disposition of business/assets

 

 

22

 

 

 

 

22

 

 

(1

)

Loss on early extinguishment of debt

 

 

(1

)

 

(8

)

 

(3

)

 

(31

)

Certain legal settlements and related expenses

 

 

 

 

(1

)

 

(1

)

 

(3

)

Amortization of pension and postretirement actuarial losses

 

 

(18

)

 

(21

)

 

(55

)

 

(62

)

Net plant incident remediation (costs) credits

 

 

(4

)

 

(3

)

 

2

 

 

(3

)

Restructuring, impairment and plant closing and transition costs          

 

 

(45

)

 

(14

)

 

(88

)

 

(223

)

​  

​  

​  

​  

​  

​  

​  

​  

Net income

 

$

63

 

$

64

 

$

218

 

$

118

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  


 

 

 

(1)          

Beginning in the second quarter of 2016, we 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. We have recasted the measure of each segment's profit or loss in the prior periods disclosed to reflect segment adjusted EBITDA.

Segment adjusted EBITDA is defined as net income of Huntsman Corporation or Huntsman 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, integration and separation expenses; (b) EBITDA from discontinued operations; (c) gain (loss) on disposition of businesses/assets; (d) loss on early extinguishment of debt; (e) certain legal settlements and related expenses; (f) amortization of pension and postretirement actuarial losses; (g) net plant incident remediation (costs) credits; and (h) restructuring, impairment, plant closing and transition costs.

 

 

 

(2)          

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.