v2.4.0.6
Segment And Geographic Information
 12 Months Ended
Dec. 31, 2011
Segment And Geographic Information [Abstract]  
Segment And Geographic Information

19. Segment and Geographic Information

Segment Information

The Company operates in two principal business segments: Olefins and Vinyls. These segments are strategic business units that offer a variety of different products. The Company manages each segment separately as each business requires different technology and marketing strategies.

The Company's Olefins segment manufactures and markets ethylene, polyethylene, styrene monomer and various ethylene co-products. The majority of the Company's ethylene production is used in the Company's polyethylene, styrene and VCM operations. The remainder of the Company's ethylene is sold to external customers. In addition, the Company makes ethylene co-products such as propylene, crude butadiene and hydrogen that are sold to external customers.

The majority of sales in the Company's Olefins business are made under long-term agreements where contract volumes are established within a range (typically, more than one year). Earlier terminations may occur if the parties fail to agree on price and deliveries are suspended for a period of several months. In most cases, these contracts also contemplate extension of the term unless specifically terminated by one of the parties. No single customer accounted for more than 10% of sales in the Olefins segment for the years ended December 31, 2011, 2010 or 2009.

The Company's Vinyls segment manufactures and markets PVC, VCM, chlorine, caustic soda and ethylene. The Company also manufactures and sells products fabricated from PVC that the Company produces, including pipe, window and door profiles and fence. The Company's main manufacturing complex is located in Calvert City. It includes an ethylene plant, a chlor-alkali plant, a VCM plant and a PVC plant. The Company also operates a PVC and VCM manufacturing facility in Geismar, Louisiana. In addition, the Company owns a 59% interest in a PVC joint venture in China.

The Company uses its chlorine, VCM and PVC production to manufacture building products at the Company's 10 regional plants. For the years ended December 31, 2011 and 2009, no single customer accounted for more than 10% of sales in the Vinyls segment. For the year ended December 31, 2010, one customer in the Company's Vinyls segment accounted for 10.6% of segment net sales.

 

The accounting policies of the individual segments are the same as those described in Note 1.

 

                         
     Year Ended December 31,  
     2011     2010     2009  

Net external sales

                         

Olefins

                         

Polyethylene

    $ 1,772,144      $ 1,656,203      $ 1,210,706   

Ethylene, styrene and other

      795,698        605,009        400,745   
    

 

 

    

 

 

    

 

 

  

Total olefins

      2,567,842        2,261,212        1,611,451   
    

 

 

    

 

 

    

 

 

  

Vinyls

                         

PVC, caustic soda and other

      757,314        558,156        398,825   

Building products

      294,692        352,419        315,447   
    

 

 

    

 

 

    

 

 

  

Total vinyls

      1,052,006        910,575        714,272   
    

 

 

    

 

 

    

 

 

  
     $ 3,619,848      $ 3,171,787      $ 2,325,723   
    

 

 

    

 

 

    

 

 

  

Intersegment sales

                         

Olefins

    $ 444,889      $ 322,125      $ 233,746   

Vinyls

      1,474        1,047        1,222   
    

 

 

    

 

 

    

 

 

  
     $ 446,363      $ 323,172      $ 234,968   
    

 

 

    

 

 

    

 

 

  

Income (loss) from operations

                         

Olefins

    $ 459,266      $ 460,027      $ 177,101   

Vinyls

      4,012        (62,429 )      (57,445 ) 

Corporate and other

      (16,482 )      (19,234 )      (12,399 ) 
    

 

 

    

 

 

    

 

 

  
     $ 446,796      $ 378,364      $ 107,257   
    

 

 

    

 

 

    

 

 

  

Depreciation and amortization

                         

Olefins

    $ 86,915      $ 86,086      $ 82,952   

Vinyls

      43,877        42,062        39,843   

Corporate and other

      605        584        404   
    

 

 

    

 

 

    

 

 

  
     $ 131,397      $ 128,732      $ 123,199   
    

 

 

    

 

 

    

 

 

  

Other income, net

                         

Olefins

    $ 2,813      $ 440      $ 440   

Vinyls

      194        399        478   

Corporate and other

      2,621        3,632        5,535   
    

 

 

    

 

 

    

 

 

  
     $ 5,628      $ 4,471      $ 6,453   
    

 

 

    

 

 

    

 

 

  

Provision for (benefit from) income taxes

                         

Olefins

    $ 149,033      $ 147,296      $ 44,987   

Vinyls

      (2,193 )      (24,519 )      (31,287 ) 

Corporate and other

      (4,374 )      (1,210 )      12,058   
    

 

 

    

 

 

    

 

 

  
     $ 142,466      $ 121,567      $ 25,758   
    

 

 

    

 

 

    

 

 

  
                         

Capital expenditures

                         

Olefins

    $ 90,641      $ 37,865      $ 40,251   

Vinyls

      84,192        42,371        58,186   

Corporate and other

      2,010        1,033        1,332   
    

 

 

    

 

 

    

 

 

  
     $ 176,843      $ 81,269      $ 99,769   
    

 

 

    

 

 

    

 

 

  

 

 

                 
     December 31,
2011		      December 31,
2010		  

Total assets

                  

Olefins

    $ 1,441,752       $ 1,351,088   

Vinyls

      824,825         767,875   

Corporate and other

      1,000,244         835,181   
    

 

 

     

 

 

  
     $ 3,266,821       $ 2,954,144   
    

 

 

     

 

 

  

In the first quarter of 2011, in order to better reflect large buyer market related pricing, the Company changed its intersegment market pricing methodology used to account for intersegment sales of ethylene sold from the Olefins segment to the Vinyls segment. Had this pricing methodology been in effect on January 1, 2010, the impact on Olefins segment income from operations for 2010 would be a reduction of $29,813. This reduction would be offset by an improvement in the Vinyls and Corporate segments' operating results for 2010 of $25,536 and $4,277, respectively. If this pricing methodology were in effect on January 1, 2009, income from operations for the Olefins segment for 2009 would have increased by $2,979. This increase would be offset by a reduction in the Vinyls and Corporate segments' operating results for 2009 of $2,847 and $132, respectively. The impact on the Corporate segment's loss from operations for 2010 and 2009 is attributable to changes in intercompany profit in inventory reserve related to sales from the Olefins segment to the Vinyls segment. There would be no impact on the Company's reported consolidated income from operations for 2010 or 2009.

A reconciliation of total segment income from operations to consolidated income before income taxes is as follows:

 

                         
     Year Ended December 31,  
     2011     2010     2009  

Income from operations for reportable segments

    $ 446,796      $ 378,364      $ 107,257   

Interest expense

      (50,992 )      (39,875 )      (34,957 ) 

Other income, net

      5,628        4,471        6,453   
    

 

 

    

 

 

    

 

 

  

Income before income taxes

    $ 401,432      $ 342,960      $ 78,753   
    

 

 

    

 

 

    

 

 

  

Geographic Information

 

                         
     Year Ended December 31,  
     2011      2010      2009  

Sales to external customers (1)

                          

United States

    $ 3,221,562       $ 2,832,980       $ 2,088,344   

Foreign

                           

Canada

      247,357         214,662         154,972   

Singapore

      29,210         32,733         27,300   

Other

      121,719         91,412         55,107   
    

 

 

     

 

 

     

 

 

  
     $ 3,619,848       $ 3,171,787       $ 2,325,723   
    

 

 

     

 

 

     

 

 

  

 

                 
     December 31,
2011		      December 31,
2010		  

Long-lived assets

                  

United States

    $ 1,223,073       $ 1,159,051   

Foreign

      8,993         11,283   
    

 

 

     

 

 

  
     $ 1,232,066       $ 1,170,334   
    

 

 

     

 

 

  

(1) Revenues are attributed to countries based on location of customer.