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Segment Information | 9 Months Ended
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Sep. 30, 2017
Segment Reporting [Abstract] |
Reportable Segments | Segment Information: Our three reportable segments include Lithium and Advanced Materials, Bromine Specialties and Refining Solutions. Each segment has a dedicated team of sales, research and development, process engineering, manufacturing and sourcing, and business strategy personnel and has full accountability for improving execution through greater asset and market focus, agility and responsiveness. This structure aligns with the markets and customers we serve through each of the segments. The structure also facilitates the continued standardization of business processes across the organization, and is consistent with the manner in which information is presently used internally by the Company’s chief operating decision maker to evaluate performance and make resource allocation decisions. Summarized financial information concerning our reportable segments is shown in the following tables. The “All Other” category comprises operating segments that did not fit into any of our core businesses. During the first quarter of 2016, we completed the sales of the metal sulfides business and the minerals-based flame retardants and specialty chemicals businesses. For additional information about these businesses, see Note 3, “Divestitures.” Following the sales of these businesses, the “All Other” category includes only the fine chemistry services business. The Corporate category is not considered to be a segment and includes corporate-related items not allocated to the operating segments. Pension and OPEB service cost (which represents the benefits earned by active employees during the period) and amortization of prior service cost or benefit are allocated to the reportable segments, All Other, and Corporate, whereas the remaining components of pension and OPEB benefits cost or credit (“Non-operating pension and OPEB items”) are included in Corporate. Segment data includes intersegment transfers of raw materials at cost and allocations for certain corporate costs. The Company’s chief operating decision maker uses earnings before interest, taxes, depreciation and amortization, as adjusted on a consistent basis for certain non-recurring or unusual items such as acquisition and integration related costs, utilization of inventory markup, gains or losses on sales of businesses, restructuring charges, facility divestiture charges, non-operating pension and OPEB items and other significant non-recurring items (“adjusted EBITDA”), in a balanced manner and on a segment basis to assess the ongoing performance of the Company’s business segments and to allocate resources. In addition, management uses adjusted EBITDA for business planning purposes and as a significant component in the calculation of performance-based compensation for management and other employees. The Company has reported adjusted EBITDA because management believes it provides transparency to investors and enables period-to-period comparability of financial performance. Adjusted EBITDA is a financial measure that is not required by, or presented in accordance with, U.S. GAAP. Adjusted EBITDA should not be considered as an alternative to Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP, or any other financial measure reported in accordance with U.S. GAAP.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2017 |  | 2016 |  | 2017 |  | 2016
| (In thousands)
Net sales: |  |  |  |  |  |  |
Lithium and Advanced Materials | $ | 343,557 |  |  | $ | 240,424 |  |  | $ | 945,791 |  |  | $ | 689,950 |
Bromine Specialties | 212,923 |  |  | 194,496 |  |  | 636,059 |  |  | 597,912 |
Refining Solutions | 170,275 |  |  | 190,453 |  |  | 539,904 |  |  | 539,044 |
All Other | 28,021 |  |  | 28,272 |  |  | 91,144 |  |  | 150,987 |
Corporate | 90 |  |  | 365 |  |  | 1,289 |  |  | 2,655 |
Total net sales | $ | 754,866 |  |  | $ | 654,010 |  |  | $ | 2,214,187 |  |  | $ | 1,980,548 |
Adjusted EBITDA: |  |  |  |  |  |  |
Lithium and Advanced Materials | $ | 130,218 |  |  | $ | 91,719 |  |  | $ | 382,789 |  |  | $ | 260,861 |
Bromine Specialties | 63,936 |  |  | 51,807 |  |  | 194,499 |  |  | 179,977 |
Refining Solutions | 43,120 |  |  | 64,960 |  |  | 142,777 |  |  | 181,620 |
All Other | 306 |  |  | 5,470 |  |  | 7,906 |  |  | 14,810 |
Corporate | (28,197 | ) |  | (25,627 | ) |  | (88,271 | ) |  | (66,435 | )
Total adjusted EBITDA | $ | 209,383 |  |  | $ | 188,329 |  |  | $ | 639,700 |  |  | $ | 570,833 |
See below for a reconciliation of adjusted EBITDA, the non-GAAP financial measure, from Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP (in thousands):
| Lithium and Advanced Materials |  | Bromine Specialties |  | Refining Solutions |  | Reportable Segments Total |  | All Other |  | Corporate |  | Consolidated Total
Three months ended September 30, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) attributable to Albemarle Corporation | $ | 103,199 |  |  | $ | 53,760 |  |  | $ | 34,392 |  |  | $ | 191,351 |  |  | $ | (1,776 | ) |  | $ | (70,905 | ) |  | $ | 118,670 |
Depreciation and amortization | 26,136 |  |  | 10,176 |  |  | 9,978 |  |  | 46,290 |  |  | 2,082 |  |  | 1,523 |  |  | 49,895 |
Utilization of inventory markup(a) | 568 |  |  | — |  |  | — |  |  | 568 |  |  | — |  |  | — |  |  | 568 |
Adjustment to gain on acquisition(b) | 1,408 |  |  | — |  |  | — |  |  | 1,408 |  |  | — |  |  | — |  |  | 1,408 |
Acquisition and integration related costs(c) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5,635 |  |  | 5,635 |
Interest and financing expenses | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 15,792 |  |  | 15,792 |
Income tax expense | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 18,495 |  |  | 18,495 |
Non-operating pension and OPEB items | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,028 | ) |  | (1,028 | )
Multiemployer plan shortfall contributions(d) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,646 |  |  | 1,646 |
Other(e) | (1,093 | ) |  | — |  |  | (1,250 | ) |  | (2,343 | ) |  | — |  |  | 645 |  |  | (1,698 | )
Adjusted EBITDA | $ | 130,218 |  |  | $ | 63,936 |  |  | $ | 43,120 |  |  | $ | 237,274 |  |  | $ | 306 |  |  | $ | (28,197 | ) |  | $ | 209,383 |
Three months ended September 30, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) attributable to Albemarle Corporation | $ | 66,166 |  |  | $ | 41,621 |  |  | $ | 55,981 |  |  | $ | 163,768 |  |  | $ | 3,806 |  |  | $ | (39,354 | ) |  | $ | 128,220 |
Depreciation and amortization | 25,553 |  |  | 10,186 |  |  | 8,979 |  |  | 44,718 |  |  | 1,664 |  |  | 1,592 |  |  | 47,974 |
Acquisition and integration related costs(c) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 6,749 |  |  | 6,749 |
Interest and financing expenses | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 15,946 |  |  | 15,946 |
Income tax expense | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 12,394 |  |  | 12,394 |
Income from discontinued operations (net of tax) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (23,185 | ) |  | (23,185 | )
Non-operating pension and OPEB items | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (231 | ) |  | (231 | )
Other(f) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 462 |  |  | 462 |
Adjusted EBITDA | $ | 91,719 |  |  | $ | 51,807 |  |  | $ | 64,960 |  |  | $ | 208,486 |  |  | $ | 5,470 |  |  | $ | (25,627 | ) |  | $ | 188,329 |
Nine months ended September 30, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) attributable to Albemarle Corporation | $ | 292,655 |  |  | $ | 164,193 |  |  | $ | 115,329 |  |  | $ | 572,177 |  |  | $ | 1,622 |  |  | $ | (300,583 | ) |  | $ | 273,216 |
Depreciation and amortization | 74,157 |  |  | 30,306 |  |  | 28,698 |  |  | 133,161 |  |  | 6,284 |  |  | 4,642 |  |  | 144,087 |
Utilization of inventory markup(a) | 23,095 |  |  | — |  |  | — |  |  | 23,095 |  |  | — |  |  | — |  |  | 23,095 |
Restructuring and other(g) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 17,141 |  |  | 17,141 |
Gain on acquisition(b) | (6,025 | ) |  | — |  |  | — |  |  | (6,025 | ) |  | — |  |  | — |  |  | (6,025 | )
Acquisition and integration related costs(c) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 26,395 |  |  | 26,395 |
Interest and financing expenses(h) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 98,895 |  |  | 98,895 |
Income tax expense | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 53,596 |  |  | 53,596 |
Non-operating pension and OPEB items | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (3,144 | ) |  | (3,144 | )
Multiemployer plan shortfall contributions(d) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 6,586 |  |  | 6,586 |
Other(e) | (1,093 | ) |  | — |  |  | (1,250 | ) |  | (2,343 | ) |  | — |  |  | 8,201 |  |  | 5,858 |
Adjusted EBITDA | $ | 382,789 |  |  | $ | 194,499 |  |  | $ | 142,777 |  |  | $ | 720,065 |  |  | $ | 7,906 |  |  | $ | (88,271 | ) |  | $ | 639,700 |
Nine months ended September 30, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) attributable to Albemarle Corporation | $ | 186,373 |  |  | $ | 150,221 |  |  | $ | 154,767 |  |  | $ | 491,361 |  |  | $ | 133,012 |  |  | $ | (582,788 | ) |  | $ | 41,585 |
Depreciation and amortization | 74,488 |  |  | 29,756 |  |  | 26,853 |  |  | 131,097 |  |  | 5,629 |  |  | 4,562 |  |  | 141,288 |
(Gain) loss on sales of businesses, net(i) | — |  |  | — |  |  | — |  |  | — |  |  | (123,831 | ) |  | 1,533 |  |  | (122,298 | )
Acquisition and integration related costs(c) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 44,337 |  |  | 44,337 |
Interest and financing expenses | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 46,860 |  |  | 46,860 |
Income tax expense | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 61,535 |  |  | 61,535 |
Loss from discontinued operations (net of tax) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 357,843 |  |  | 357,843 |
Non-operating pension and OPEB items | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (779 | ) |  | (779 | )
Other(f) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 462 |  |  | 462 |
Adjusted EBITDA | $ | 260,861 |  |  | $ | 179,977 |  |  | $ | 181,620 |  |  | $ | 622,458 |  |  | $ | 14,810 |  |  | $ | (66,435 | ) |  | $ | 570,833 |
(a) | In connection with the acquisition of Jiangli New Materials, the Company valued inventory purchased from Jiangli New Materials at fair value, which resulted in a markup of the underlying net book value of the inventory totaling approximately $23.1 million. The inventory markup was expensed over the estimated remaining selling period. For the three-month and nine-month periods ended September 30, 2017, $0.6 million and $23.1 million, respectively, was included in Cost of goods sold related to the utilization of the inventory markup.
(b) | Gain recorded in Other (expenses) income, net related to the acquisition of the remaining 50% interest in Salmag. See Note 2, “Acquisitions,” for additional information.
(c) | See Note 2, “Acquisitions,” for additional information.
(d) | Included shortfall contributions for our multiemployer plan financial improvement plan. See Note 13, “Pension Plans and Other Postretirement Benefits,” for additional information.
(e) | Included amounts for the three-month period ended September 30, 2017 recorded in:
▪ | Cost of goods sold - $1.3 million reversal of deferred income related to an abandoned project at an unconsolidated investment.
▪ | Other (expenses) income, net - $1.1 million related to a reversal of a liability associated with the previous disposal of a property, partially offset by the revision of tax indemnification expenses of $0.7 million primarily related to the filing of tax returns for a previously disposed business.
Included amounts for the nine-month period ended September 30, 2017 recorded in:
▪ | Cost of goods sold - $1.3 million reversal of deferred income related to an abandoned project at an unconsolidated investment.
▪ | Selling, general and administrative expenses - $1.0 million related to a reversal of an accrual recorded as part of purchase accounting from a previous acquisition.
▪ | Other (expenses) income, net - $3.2 million of asset retirement obligation charges related to the revision of an estimate at a site formerly owned by Albemarle, a loss of $2.1 million associated with the previous disposal of a business, final settlement claims associated with the previous disposal of a business of $2.0 million and the revision of tax indemnification expenses of $1.9 million primarily related to the filing of tax returns and a competent authority agreement for a previously disposed business. This is partially offset by $1.1 million related to a reversal of a liability associated with the previous disposal of a property.
(f) | Includes the write-off of fixed assets of $1.4 million included in Research and development expenses, partially offset by a net gain of $0.9 million on the sales of properties included in Other (expenses) income, net.
(g) | During 2017, we initiated action to reduce costs in each of our reportable segments at several locations, primarily at our Lithium sites in Germany. Based on the restructuring plans, we have recorded expenses of $2.9 million in Cost of goods sold, $8.4 million in Selling, general and administrative expenses and $5.8 million in Research and development expenses for the nine-month period ended September 30, 2017, primarily related to expected severance payments. The unpaid balance is recorded in Accrued expenses at September 30, 2017, with the expectation that the majority of these plans will be completed by the end of 2017.
(h) | Included in Interest and financing expenses is a loss on early extinguishment of debt of $52.8 million. See Note 10, “Long-term Debt,” for additional information.
(i) | See Note 3, “Divestitures,” for additional information.
In November 2017, we announced that during the first quarter of 2018, the Performance Catalyst Solutions ("PCS") product line will merge with the Refining Solutions reportable segment to form a global business focused on catalysts. As a result, our three reportable segments will include: (1) Lithium, (2) Bromine Specialties and (3) Catalysts.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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