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Business Segments
 6 Months Ended
Jun. 30, 2012
Business Segments  
Business Segments

(19) 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, liquefied petroleum gas, asphalts, and petroleum refining by-products, including pet coke. The Petroleum Segment's Coffeyville refinery sells pet coke to the Partnership for use in the manufacture of nitrogen fertilizer at the adjacent nitrogen fertilizer plant. For the Petroleum Segment, a per-ton transfer price is used to record intercompany sales on the part of the Petroleum Segment and corresponding intercompany cost of product sold (exclusive of depreciation and amortization) for the Nitrogen Fertilizer Segment. The per ton transfer price paid, pursuant to the pet coke supply agreement that became effective October 24, 2007, is based on the lesser of a pet coke price derived from the price received by the Nitrogen Fertilizer Segment for UAN (subject to a UAN based price ceiling and floor) and a pet coke price index for pet coke. The intercompany transactions are eliminated in the Other Segment. Intercompany sales included in petroleum net sales were approximately $2.4 million and $3.5 million for the three months ended June 30, 2012 and 2011, respectively. Intercompany sales included in petroleum net sales were approximately $4.8 million and $4.9 million for the six months ended June 30, 2012 and 2011, 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, 2012 and 2011 of approximately $(0.1 million) and $6.1 million, respectively. For the six months ended June 30, 2012 and 2011, the Petroleum Segment recorded intercompany cost of product sold (exclusive of depreciation and amortization) for the hydrogen purchases (sales) of approximately $5.6 million and $5.3 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 $2.3 and $2.9 million for the three months ended June 30, 2012 and 2011, respectively. Intercompany cost of product sold (exclusive of depreciation and amortization) for the pet coke transfer described above was approximately $5.2 and $3.6 million for the six months ended June 30, 2012 and 2011, respectively.

        Pursuant to the feedstock agreement, the Coffeyville refinery and nitrogen fertilizer plant have the right to transfer excess hydrogen (hydrogen determined not to be needed to meet the current anticipated operational requirements of the facility transferring the 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. For the three months ended June 30, 2012 and 2011, the net sales generated from intercompany hydrogen sales were $0.0 and $6.1 million, respectively. For the six months ended June 30, 2012 and 2011, the net sales generated from intercompany hydrogen sales were $5.7 million and $6.1 million, respectively. For the three months ended June 30, 2012 and 2011, the Nitrogen Fertilizer Segment also recognized approximately $0.1 million and $0.0, respectively, of cost of product sold related to the transfer of excess hydrogen. For the six months ended June 30, 2012 and 2011, the Nitrogen Fertilizer Segment also recognized approximately $0.1 million and $0.7 million, respectively, of cost of product sold related to the transfer of excess hydrogen. As these intercompany sales and cost of product sold are eliminated, there is no financial statement impact on the condensed consolidated financial statements.

  • 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.

        The following table summarizes certain operating results and capital expenditures information by segment:

 
   Three Months Ended
June 30, 		  Six Months Ended
June 30, 		 
 
   2012   2011   2012   2011  
 
   (in thousands)
  

Net sales

                          

Petroleum

   $ 2,229,539   $ 1,376,681   $ 4,128,024   $ 2,487,941  

Nitrogen Fertilizer

     81,431     80,673     159,707     138,050  

Intersegment elimination

     (2,652 )   (9,638 )   (10,782 )   (11,010 )
                   

Total

   $ 2,308,318   $ 1,447,716   $ 4,276,949   $ 2,614,981  
                   

Cost of product sold (exclusive of depreciation and amortization)

                          

Petroleum

   $ 1,866,155   $ 1,122,763   $ 3,496,820   $ 2,053,046  

Nitrogen Fertilizer

     10,725     9,746     23,323     17,237  

Intersegment elimination

     (2,670 )   (9,134 )   (10,778 )   (10,086 )
                   

Total

   $ 1,874,210   $ 1,123,375   $ 3,509,365   $ 2,060,197  
                   

Direct operating expenses (exclusive of depreciation and amortization)

                          

Petroleum

   $ 71,583   $ 44,054   $ 164,286   $ 89,464  

Nitrogen Fertilizer

     22,524     22,266     45,361     45,290  

Other

     (8 )   (113 )   (34 )   (113 )
                   

Total

   $ 94,099   $ 66,207   $ 209,613   $ 134,641  
                   

Insurance recovery—business interruption

                          

Petroleum

   $ —   $ —   $ —   $ —  

Nitrogen Fertilizer

     —     —     —     (2,870 )

Other

     —     —     —     —  
                   

Total

   $ —   $ —   $ —   $ (2,870 )
                   

Depreciation and amortization

                          

Petroleum

   $ 26,638   $ 16,966   $ 52,897   $ 33,882  

Nitrogen Fertilizer

     5,158     4,648     10,596     9,285  

Other

     394     429     809     887  
                   

Total

   $ 32,190   $ 22,043   $ 64,302   $ 44,054  
                   

Operating income (loss)

                          

Petroleum

   $ 248,856   $ 183,537   $ 383,752   $ 289,227  

Nitrogen Fertilizer

     36,047     39,346     67,473     56,112  

Other

     (49,131 )   (4,963 )   (74,945 )   (17,813 )
                   

Total

   $ 235,772   $ 217,920   $ 376,280   $ 327,526  
                   

Capital expenditures

                          

Petroleum

   $ 26,990   $ 8,626   $ 62,393   $ 13,214  

Nitrogen fertilizer

     16,944     4,006     39,218     6,047  

Other

     1,700     1,010     3,548     1,718  
                   

Total

   $ 45,634   $ 13,642   $ 105,159   $ 20,979  
                   

 
   As of June 30,
2012 		  As of December 31,
2011 		 
 
   (in thousands)
  

Total assets

              

Petroleum

   $ 2,540,013   $ 2,322,148  

Nitrogen Fertilizer

     639,703     659,309  

Other

     104,998     137,834  
           

Total

   $ 3,284,714   $ 3,119,291  
           

Goodwill

              

Petroleum

   $ —   $ —  

Nitrogen Fertilizer

     40,969     40,969  

Other

     —     —  
           

Total

   $ 40,969   $ 40,969