XML 14 R23.htm IDEA: XBRL DOCUMENT  v2.3.0.11
Business Segments
 6 Months Ended
Jun. 30, 2011
Business Segments [Abstract]  
Business Segments
 
(16)   Business Segments
 
The Company measures segment profit as operating income for Petroleum and Nitrogen Fertilizer, CVR’s two reporting segments, based on the definitions provided in ASC Topic 280 — Segment Reporting. All operations of the segments are located within the United States.
 
Petroleum
 
Principal products of the Petroleum Segment are refined fuels, propane and petroleum refining by-products including pet coke. The Petroleum Segment sells the pet coke to the Partnership for use in the manufacture of nitrogen fertilizer at the adjacent nitrogen fertilizer plant in accordance with a pet coke supply agreement. For the Petroleum Segment, a per-ton transfer price is used to record intercompany sales on the part of the Petroleum Segment and a corresponding intercompany cost of product sold (exclusive of depreciation and amortization) is recorded for the Nitrogen Fertilizer Segment. The price the Nitrogen Fertilizer Segment pays pursuant to the pet coke supply agreement is based on the lesser of a pet coke price derived from the price received for UAN, or the UAN-based price, and a pet coke price index. The UAN-based price begins with a pet coke price of $25 per ton based on a price per ton for UAN (exclusive of transportation cost), or netback price, of $205 per ton, and adjusts up or down $0.50 per ton for every $1.00 change in the netback price. The UAN-based price has a ceiling of $40 per ton and a floor of $5 per ton. The intercompany transactions are eliminated in the Other Segment. Intercompany sales included in Petroleum Segment net sales were approximately $3.5 million and $1.8 million for the three months ended June 30, 2011 and 2010, respectively. Intercompany sales included in Petroleum Segment net sales were approximately $4.9 million and $2.2 million for the six months ended June 30, 2011 and 2010, respectively.
 
The Petroleum Segment recorded intercompany cost of product sold (exclusive of depreciation and amortization) for the hydrogen purchases (sales) described below under “Nitrogen Fertilizer” for the three months ended June 30, 2011 and 2010 of approximately $6.1 million and $(0.6 million), respectively. For the six months ended June 30, 2011 and 2010, the Petroleum Segment recorded intercompany cost of product sold (exclusive of depreciation and amortization) for the hydrogen purchases (sales) of approximately $5.3 million and $(1.1 million), respectively.
 
Nitrogen Fertilizer
 
The principal product of the Nitrogen Fertilizer Segment is nitrogen fertilizer. Intercompany cost of product sold (exclusive of depreciation and amortization) for the pet coke transfer described above was approximately $2.9 million and $0.6 million for the three months ended June 30, 2011 and 2010, respectively. Intercompany cost of product sold (exclusive of depreciation and amortization) for the pet coke transfer described above was approximately $3.6 million and $1.0 million for the six months ended June 30, 2011 and 2010, respectively.
 
Pursuant to the feedstock agreement, the Company’s segments have the right to transfer excess hydrogen to one another. Sales of hydrogen to the Petroleum Segment have been reflected as net sales for the Nitrogen Fertilizer Segment. Receipts of hydrogen from the Petroleum Segment have been reflected in cost of product sold (exclusive of depreciation and amortization) for the Nitrogen Fertilizer Segment. The Nitrogen Fertilizer Segment recorded cost of product sold (exclusive of depreciation and amortization) from intercompany hydrogen purchases of $0 and approximately $0.7 million for the three and six months ended June 30, 2011, respectively. For the three and six months ended June 30, 2011, the Nitrogen Fertilizer Segment recorded net sales generated from intercompany sales of hydrogen to the Petroleum Segment of approximately $6.1 million. For the three and six months ended June 30, 2010, the Nitrogen Fertilizer Segment recorded costs of product sold (exclusive of depreciation and amortization) from intercompany hydrogen purchases of approximately $0.6 million and $1.1 million, respectively.
 
Other Segment
 
The Other Segment reflects intercompany eliminations, cash and cash equivalents, all debt related activities, income tax activities and other corporate activities that are not allocated to the operating segments.
 
                                 
    Three Months Ended
 		    Six Months Ended
 		 
    June 30,     June 30,  
    2011     2010     2011     2010  
    (in thousands)  
 
Net sales
                               
Petroleum
  $ 1,376,681     $ 951,330     $ 2,487,941     $ 1,808,018  
Nitrogen Fertilizer
    80,673       56,346       138,050       94,631  
Intersegment eliminations
    (9,638 )     (1,778 )     (11,010 )     (2,239 )
                                 
Total
  $ 1,447,716     $ 1,005,898     $ 2,614,981     $ 1,900,410  
                                 
Cost of product sold (exclusive of depreciation and amortization)
                               
Petroleum
  $ 1,122,763     $ 882,150     $ 2,053,046     $ 1,681,101  
Nitrogen Fertilizer
    9,746       11,880       17,237       16,857  
Intersegment eliminations
    (9,134 )     (2,378 )     (10,086 )     (3,416 )
                                 
Total
  $ 1,123,375     $ 891,652     $ 2,060,197     $ 1,694,542  
                                 
Direct operating expenses (exclusive of depreciation and amortization)
                               
Petroleum
  $ 44,054     $ 41,145     $ 89,356     $ 79,534  
Nitrogen Fertilizer
    22,266       21,334       45,290       43,507  
Other
    (113 )     —       (113 )     —  
                                 
Total
  $ 66,207     $ 62,479     $ 134,533     $ 123,041  
                                 
Insurance recovery — business interruption
                               
Petroleum
  $ —     $ —     $ —     $ —  
Nitrogen Fertilizer
    —       —       (2,870 )     —  
Other
    —       —       —       —  
                                 
Total
  $ —     $ —     $ (2,870 )   $ —  
                                 
Net costs associated with flood
                               
Petroleum
  $ —     $ —     $ 108     $ —  
Nitrogen Fertilizer
    —       —       —       —  
Other
    —       —       —       —  
                                 
Total
  $ —     $ —     $ 108     $ —  
                                 
Depreciation and amortization
                               
Petroleum
  $ 16,966     $ 16,418     $ 33,882     $ 32,552  
Nitrogen Fertilizer
    4,648       4,671       9,285       9,336  
Other
    429       464       887       925  
                                 
Total
  $ 22,043     $ 21,553     $ 44,054     $ 42,813  
                                 
Operating income (loss)
                               
Petroleum
  $ 183,537     $ 4,645     $ 289,227     $ (2,449 )
Nitrogen Fertilizer
    39,346       16,502       56,112       19,470  
Other
    (4,963 )     (1,726 )     (17,813 )     (9,194 )
                                 
Total
  $ 217,920     $ 19,421     $ 327,526     $ 7,827  
                                 
Capital expenditures
                               
Petroleum
  $ 8,626     $ 4,141     $ 13,214     $ 13,250  
Nitrogen Fertilizer
    4,006       753       6,047       1,969  
Other
    1,010       516       1,718       1,607  
                                 
Total
  $ 13,642     $ 5,410     $ 20,979     $ 16,826  
                                 
 
                 
    As of June 30,
 		    As of December 31,
 		 
    2011     2010  
    (in thousands)  
 
Total assets
               
Petroleum
  $ 1,136,352     $ 1,049,361  
Nitrogen Fertilizer
    640,740       452,165  
Other
    572,814       238,658  
                 
Total
  $ 2,349,906     $ 1,740,184  
                 
Goodwill
               
Petroleum
  $ —     $ —  
Nitrogen Fertilizer
    40,969       40,969  
Other
    —       —  
                 
Total
  $ 40,969     $ 40,969